NEW YORK — On Thursday night Kuwait City heard air raid sirens for the first time since the current round of US-Iran hostilities began. Iranian ballistic missiles and drones struck the Ahmad al-Jaber Air Base in southern Kuwait, where American forces are stationed, expanding Iran’s retaliation campaign beyond the Strait of Hormuz corridor and onto the Arabian Peninsula proper. The question on Friday was not whether Kuwaiti infrastructure had been hit. It had. The question was why oil did not spike harder on the news.
Brent crude settled at $95.04 a barrel on Friday, its second consecutive session below $96 after briefly breaching that level on Thursday following the initial Kuwait strike reports. West Texas Intermediate closed near $91.20. Both benchmarks are up more than 7 percent for the week, but neither has breached the $100 threshold that many analysts had projected if Iran expanded its campaign to Gulf Cooperation Council member states. That failure to break higher is the more interesting market signal than the price itself.
Iran’s military, through state media, said it struck the Ahmad al-Jaber Air Base because it hosts US Air Force assets involved in the ongoing strikes against Iranian territory. Kuwait’s army confirmed that missiles and drones entered Kuwaiti airspace and that air defense systems intercepted several incoming projectiles. The extent of damage to the base was disputed: Iran claimed US personnel casualties; Kuwait and Washington offered no immediate confirmation. The strikes on Kuwait followed Iranian attacks on US bases in Bahrain, Jordan, and Iraq’s Kurdistan region earlier in the week, extending a pattern documented in Iran’s strikes on Bahrain and Erbil as Kuwait first scrambled its air defenses.
Kuwait is not a major crude oil transit chokepoint in the way the Strait of Hormuz is, but it matters to the energy picture in two specific ways. US military assets based in Kuwait provide part of the force structure conducting the strikes against Iranian positions that have disrupted Hormuz transit throughout this conflict. Degrading those assets, even partially, changes the operational calculus for Washington. Beyond that, the widening of Iran’s target set to the Arabian Peninsula sends a signal to Saudi Arabia and the UAE that their territory and infrastructure are not outside the conflict’s envelope.
The Strait of Hormuz continues to operate well below pre-war capacity. Throughput has fallen from roughly 21.6 million barrels per day before the conflict began to approximately 4.9 million barrels per day at present, a 77 percent reduction. Six ships transited the strait on Wednesday, the lowest single-day count recorded during this conflict, before a modest recovery to nine on Thursday and Friday.
The market’s refusal to break through $100 on the Kuwait news reflects a specific kind of battle-hardened psychology. Traders who bought the initial Hormuz disruption spike in July have lived through multiple cycles of escalation and partial recovery since then. Each new strike, whether in Jordan, Bahrain, Erbil, or now Kuwait, has produced an intraday spike, a modest settlement, and then a plateau. The pattern has taught the market something: unless Iran demonstrates the ability to interdict GCC oil production and export infrastructure directly, not just the transit route, the disruption remains bounded. Brent at $95 is the market’s current best estimate of that bounded disruption.
The US Energy Information Administration revised its 2026 Brent forecast to an average of $79 per barrel in its latest update, up from a prior projection of $58. That figure assumes the Hormuz disruption is structural through early 2027 but does not price in further escalation to Arabian Peninsula export infrastructure. A strike on major Gulf oil processing facilities would require the EIA to revise again. The EIA’s short-term energy outlook is updated monthly, with the next revision falling in mid-September.
India’s position in this market is the most exposed among major importers. The country sources roughly 40 percent of its crude from Gulf producers, and a Brent sustained near $95 raises the cost of every barrel by roughly $30 above what India paid in early 2026, when the benchmark was near $65. The rupee’s depreciation against the dollar during the same period compounds that cost at the pump and across the fuel subsidy bill. For UK energy companies, the North Sea benchmark’s linkage to Brent means refiners and power generators are paying prices last seen in mid-2022. Canadian heavy crude, which prices at a discount to WTI, has seen that discount narrow as the Hormuz disruption increases the relative attractiveness of Western Hemisphere supply to US Gulf Coast refiners.
What the Kuwait strikes do not yet tell the market is whether Iran intends to expand further, toward Saudi Arabia, toward UAE terminals, or toward the undersea pipelines that offer GCC producers their only Hormuz bypass. If that escalation comes, the $95 plateau breaks. If it does not, the market’s Thursday-to-Friday pullback from $97 back to $95 suggests traders believe the Kuwait strikes are a signal rather than a turning point. The answer will come with Monday’s open, and it will come from Tehran before it comes from any trading desk.
