Oil prices drop 1% amid US-Iran military escalation

September 03, 2026 (MLN): Oil prices slipped on Thursday as markets remained cautious over the latest escalation between the United States and Iran, with renewed military action raising concerns over potential disruptions to Middle Eastern crude supplies.

Currently, Brent crude futures is down, 1.05%, at $94.63 per barrel, according to data by Mettis Global.

West Texas Intermediate (WTI) crude futures is down by $0.96, or 1.05%, to $90.05 per barrel by [12:14 pm] PST.

The latest confrontation marked the most significant exchange of fire between the two countries since July, with the conflict now entering its seventh month, according to Reuters.

Oil benchmarks had shown sharp volatility in the previous session, with Brent and WTI prices moving between gains of up to $2 per barrel and losses of around $1. Both benchmarks touched their highest levels since July 24 during the session.

Prices later eased on indications that the latest escalation may be losing momentum.

U.S. President Donald Trump said the renewed military campaign against Iran would not continue for “too long,” while stating that U.S. forces had targeted Iranian radar and missile systems.

Trump also said U.S. forces had destroyed newly built equipment near the Strait of Hormuz, describing the strikes as heavy and warning that further attacks could be carried out if required.

Iran meanwhile expanded its list of vessels considered non-compliant, warning that ships attempting to pass through the strait could face penalties including fines, confiscation or detention.

Elsewhere, Iraq significantly increased its crude exports to around 2.34 million barrels per day in August from approximately 1.35 million bpd in July.

Iraqi energy officials attributed the increase to heavy discounts and Iranian approvals allowing Iraqi tankers to transit the Strait of Hormuz, while September exports are also expected to rise.

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