Oil prices are moving higher after Kuwait's military announced that its air defense systems are actively engaged in intercepting incoming hostile missile and drone attacks.

In an announcement from the country's military, Kuwait stated: "Kuwaiti air defenses are responding to Iranian missile and drone attacks. Any explosions heard [are] the result of air defense systems intercepting hostile targets."

Kuwait sits directly on the Persian Gulf adjacent to Iran and Iraq, and it is home to roughly 6% of the world's proven oil reserves according to OPEC figures. The report that Iranian projectiles are being engaged over Kuwaiti territory marks a notable widening of the direct conflict zone beyond Iran and Israel, raising the prospect that Gulf energy infrastructure and shipping lanes could be drawn into the fighting — a key risk that oil markets have been pricing since the hostilities began.

The development comes amid an intensifying US-Iran conflict, and it will test the more bearish oil news reported earlier. According to a CNN report, the US military escorted 40 tankers carrying 18 million barrels through the Strait of Hormuz. That waterway handles roughly a fifth of global petroleum liquids consumption, according to the US Energy Information Administration, which is why convoys of that scale have a direct bearing on supply security. Traders will be watching whether further interceptions over Gulf states occur and whether tanker traffic through Hormuz continues to move under escort without disruption.

Source: investingLive