[MARKET UPDATE] Oil futures gap higher at the reopen amid geopolitical escalation after the US conducted strikes on Larak Island, while Iran retaliated with missiles targeting US vessels in the Strait of Hormuz and a US base in Jordan

Strikes touching Iranian territory with direct retaliation against US assets place this in the category of episodes where the crude market prices the Strait of Hormuz as the binding constraint rather than the strike itself, since a large share of seaborne oil transits that chokepoint and even limited harassment of shipping has historically fed through war-risk insurance premia, rerouting costs and freight rates before any barrel is actually lost. The pattern in past Gulf escalations has been a gap higher at the reopen, with the subsequent path hinging on whether retaliation remains a contained exchange or begins impairing tanker traffic, export infrastructure or a neighbouring producer. Larak sits adjacent to the strait, so strikes there carry more supply-transmission weight than equivalent action inland. The distinction that has mattered in comparable episodes is between symbolic retaliation, where premia have tended to bleed out over sessions, and attacks on vessels or bases that draw a further US response and extend the cycle. Worth watching next are tanker transits and insurance quotes through the strait, any move on Iranian export facilities, and whether the front of the crude curve outperforms the back, which is how physical tightness fear has typically expressed itself against pure risk sentiment.