Brent Closes Above US$90 as US-Iran Strikes Resume and Wall Street Slips

ENERGY · MARKETS

Brent crude closed above US$90 a barrel on Monday after the United States and Iran traded their first direct strikes in a month, dragging Wall Street lower and pushing gold to a two-week low. For Latin America, the escalation reprices everything from fuel subsidies in Mexico to inflation forecasts in Chile.

What happened over the weekend

US Central Command said its forces struck two Iranian rocket launchers on Larak Island, in the Strait of Hormuz, on Sunday. A spokesman, Tim Hawkins, said Iranian forces had been observed preparing to fire rockets and lay sea mines in the strait. It was the first confirmed US military strike on Iran since July 30, and it came days after the war passed its six-month mark on August 28.

Iranian state media reported that two people were killed and others wounded on Larak Island. Overnight, the Islamic Revolutionary Guard Corps (IRGC), the elite branch of Iran’s armed forces, fired ballistic missiles at two US air bases in Jordan. Jordan said it intercepted eight missiles, and no injuries were reported at either base. Iranian strikes also targeted the Al Minhad Air Base in the United Arab Emirates, according to regional reports.

The exchange ended a month in which Washington had emphasised what it calls economic warfare — a naval counter-blockade of Iranian ports and fresh sanctions under a campaign named Operation Economic Outcast — over direct military action. The Strait of Hormuz, which carried about a fifth of the world’s crude oil and liquefied natural gas before the war, remains effectively blocked: the International Monetary Fund’s PortWatch service most recently counted three transits in a day, against a pre-crisis baseline of about 85.

Brent above US$90: markets reprice war and interest rates

Brent settled at US$90.49 a barrel on Monday, up 2.7 percent, after trading as high as US$90.70 in the morning — a 2.95 percent jump over 24 hours that The Rio Times reported on Monday, when Iran also claimed a tanker had caught fire in the strait. WTI closed at US$85.76, up 2.8 percent.

Equities fell on the last trading day of August. The Dow Jones Industrial Average lost 374.09 points, or 0.7 percent, to 53,185.90. The S&P 500 slipped 0.33 percent to 7,686.14 and the Nasdaq Composite 0.12 percent to 26,370.89. Energy was the only S&P sector in positive territory, up 2.11 percent, with ExxonMobil gaining 2.7 percent and Chevron 2.1 percent. All three indexes still posted solid gains for August.

The rates market moved as much as the oil market. The yield on the 10-year US Treasury rose to 4.76 percent, its highest since January 2025, and gold futures fell about 0.8 percent to roughly US$4,495 an ounce — a two-week low — as traders priced in a near-60 percent chance of a quarter-point Federal Reserve rate hike on September 16. Fed Chair Kevin Warsh set the tone on Friday at the Jackson Hole symposium, warning that inflation remains “too hot”. Gold is still up nearly 10 percent in August, its best month since January. Friday’s US jobs report is the next test.

Trump threatens, Tehran says war helps no one

“We’re going to hit them hard,” Trump told Fox News by phone on Monday, adding: “There will be a response.” He earlier called Iran “officially a Failed Nation” on his Truth Social platform, and on Sunday posted a video — apparently generated by artificial intelligence — showing Iran’s Kharg Island oil terminal in flames. Reuters found no evidence of such an attack, and an Iranian official dismissed the post as “laughable”.

Pezeshkian struck a different note before leaving for a visit to Kyrgyzstan. “We do not seek war. That has been our message to the world until now,” he said. “However, in the face of aggression, we will not stand by. We are capable of delivering a decisive response. Instability in this region would affect everyone and create serious problems. Instability is in no country’s interest.”

US Ambassador to NATO Matthew Whitaker said the resumption of strikes did not necessarily mean a return to full-scale military operations. The naval blockade and sanctions, he said, would continue in parallel.

What US$90 oil means for Latin America

The region’s arithmetic cuts both ways. A study by the Centre for Research on Energy and Clean Air (CREA) — which The Rio Times covered last week — estimates that fossil-fuel importers worldwide paid US$330 billion more between March and August than pre-war markets had expected, with Brent averaging US$93 a barrel over the six months. Latin America as a whole came out about US$4.9 billion ahead, because exporters earn more than the region’s importers lose. But 36 of the 42 countries tracked paid more.

The winners are the crude exporters: Brazil, whose offshore pre-salt fields make it the region’s biggest producer, plus Guyana, Argentina, Colombia and Ecuador. The losers are the fuel importers — a split The Rio Times mapped in detail on Monday, when the strait began emptying again and Brent opened the week near US$90. Chile ranks among the 20 hardest-hit countries in the CREA study. Mexico paid about US$2.5 billion extra for gasoline alone between March and August, and Brazil about US$2.5 billion more for diesel, the study found.

That is where Monday’s jump bites. Governments that shield consumers from world prices — through Mexico’s fuel-tax stimulus, Brazil’s controlled Petrobras pricing or outright subsidies in parts of Central America and the Caribbean — must now reprice those commitments at US$90 oil. Every week that domestic pump prices lag world markets widens the fiscal cost; every adjustment feeds straight into inflation forecasts that central banks from Mexico City to Santiago were hoping to cut, not raise. Importers’ terms of trade — what a country earns from exports against what it pays for imports — deteriorate, while exporters’ improve. For the region’s finance ministries, September just became a harder month.

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Sources: USA Today; Reuters; US Central Command; Democracy Now; Centre for Research on Energy and Clean Air (CREA); HDFC Sky market data; IMF PortWatch.

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