US Strikes Iran’s Larak Island; Oil Jumps Above $90 on August 31

U.S. forces struck two Iranian rocket launchers on Larak Island in the Strait of Hormuz on August 31, marking the first publicly acknowledged American attack on Iran since late July. The Islamic Revolutionary Guard Corps said the strike killed and wounded several soldiers. Iran retaliated within hours, firing eight ballistic missiles at U.S. bases in Jordan and drones at the UAE. Oil prices surged on the renewed hostilities, with Brent crude gaining 2.7% to close at $90.49 a barrel.

What triggered the strikes

U.S. Central Command said Iranian forces were preparing to launch rockets carrying sea mines into the Strait of Hormuz, a vital shipping route where roughly 20% of the world’s oil and liquefied natural gas passed before the war began in February. Navy Captain Tim Hawkins, a CENTCOM spokesperson, confirmed the U.S. took “limited, precise action” against the minelaying threat. Larak Island sits just offshore from Bandar Abbas and overlooks key shipping lanes. The strike was the first known U.S. military action against Iran since late July.

Iran’s immediate response

The Islamic Revolutionary Guard Corps announced it had launched ballistic missiles at two U.S. air bases in Jordan, King Hussein and Al Azraq, calling the operation “Punishment of the Aggressor.” Jordan’s military said it intercepted all eight missiles that entered the country’s airspace early Monday, with no casualties reported at either base. Iran also claimed it fired drones at Al Menhad Air Base in the UAE, though the UAE’s Defence Ministry denied the base was targeted by missiles and said it intercepted a drone over its territorial waters. The IRGC vowed “every shot will be met with more devastating responses.”

Oil markets surge on escalation fears

Brent crude futures for September delivery gained 2.7% to close at $90.49 a barrel, while U.S. West Texas Intermediate added 2.8% to $85.76. The Strait of Hormuz has been effectively closed since the conflict began in February, disrupting global energy shipments. Tamas Varga, analyst at PVM Oil Associates, said “supply risk will persist and oil inventories will continue to deplete in the coming weeks and months.” Goldman Sachs noted that rising strikes on refineries in the Middle East and Russia have pushed refined products margins to new highs.

Trump threatens further action

President Donald Trump vowed the U.S. would strike Iran “hard” in response to the Iranian attacks. On Sunday evening, Trump posted on Truth Social that Kharg Island, Iran’s main oil export terminal, is “going to be blown to smithereens.” When asked by reporters Monday about the military response, Trump said “it’s very limited” but added “that doesn’t mean we won’t smack them.” Treasury Secretary Scott Bessent told Reuters the U.S. expects to impose new sanctions on Iran weekly, particularly targeting banks, with the goal of cutting Tehran-linked institutions out of the dollar system entirely.

Final Thoughts

The escalation marks a critical shift after a month of relative calm, with oil prices climbing 25% since the war began in February. Investors face renewed supply disruption risk in the Strait of Hormuz, a chokehold on global energy markets that threatens to worsen inflation before the midterm elections.

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