A US missile strike on Larak Island in the Strait of Hormuz sent oil prices surging past $95 a barrel on Wednesday, reigniting inflation fears and putting the “digital gold” narrative for Bitcoin under fresh scrutiny. The attack, which targeted what the Pentagon described as a “militia logistics hub,” threatens to choke off a critical chokepoint for global crude shipments.
Oil spike rattles markets
Brent crude jumped more than 6% in early trading, touching $95.20 before settling near $93.80. The Strait of Hormuz handles roughly a fifth of the world's oil supply, and any disruption there quickly ripples through energy markets. Analysts at Goldman Sachs warned that a prolonged closure could push prices above $100, though the White House said it would consider releasing more strategic reserves.
Bitcoin's safe-haven test
Bitcoin initially dipped alongside equities but recovered some ground by midday, trading around $68,000. The move was modest compared to gold, which rose 1.5%. Crypto proponents have long argued that Bitcoin is a hedge against geopolitical instability, but the data so far this year shows it still trades in high correlation with risk assets. This week's events are the latest real-world test of that thesis.
Inflation fears return
The oil spike comes at a delicate moment. The Federal Reserve had been signaling rate cuts for later this year, but a sustained jump in energy costs could complicate that timeline. Higher oil prices feed directly into consumer inflation, and the market is now pricing in a lower probability of a September cut. For crypto, that means tighter liquidity conditions could persist longer than expected.
What comes next
The Strait of Hormuz remains open for now, but shipping insurers are already raising premiums for vessels transiting the area. Iran has called an emergency UN Security Council meeting. Traders are watching for any retaliatory moves that could further disrupt supply. For crypto, the question is whether this crisis — unlike the Ukraine war or the banking turmoil of 2023 — finally breaks Bitcoin's correlation with traditional markets.
