Oil prices surged sharply on Tuesday, climbing more than 3% after the United States pulled the general license that had permitted the sale of Iranian crude oil, sending markets into a frenzy.
Brent crude futures closed $2.17 higher, a gain of 3.01%, settling at $74.16 per barrel. U.S. West Texas Intermediate crude also rose, finishing up $1.89, or 2.76%, at $70.44 per barrel.
After the official market close, prices climbed even further. By 3:00 p.m. Eastern Time, the global benchmark had risen an additional 96 cents to $75.12, while WTI jumped another $1.05 to reach $71.49. At that point, both oil benchmarks were tracking gains of more than 4% compared to the previous day’s closing prices.
The price spike followed news that three tankers were struck in the Strait of Hormuz on Tuesday. Among the vessels hit was a Qatari liquefied natural gas carrier, which Qatar confirmed was struck by an Iranian drone. A Saudi-flagged supertanker, believed to be the Wedyan, also sustained damage off the coast of Oman, though the cause of that incident was not immediately determined.
In response, a U.S. official stated Tuesday that Iran’s behavior in the Strait of Hormuz was “wholly unacceptable” and warned of consequences.
Ajay Parmar, director of energy and refining at ICIS, said the situation exposed how unstable the current ceasefire really is. “This shows just how fragile the ceasefire actually is. Further attacks could sporadically appear in the coming months and this will further add to the volatility,” Parmar said. “Just one disagreeable message from one side could bring anger to the other, and remember if Iran merely threatens to close the Strait of Hormuz again, prices will spike considerably. As such, we firmly believe that volatility really is here to stay.”
UBS analyst Giovanni Staunovo also weighed in, noting that “renewed tensions in the Middle East and concerns over the vessel attacks could drag lower oil exports from the Middle East.”
Diplomatic efforts between Washington and Tehran remain strained. Iran’s foreign minister said Tuesday that final deal negotiations will not move forward if U.S. threats persist, following remarks by U.S. President Donald Trump threatening to “finish the job” if no agreement is reached.
Investors are keeping a close eye on the ongoing U.S.-Iran talks and what they could mean for shipping traffic through the Strait of Hormuz, a waterway that — before the start of the Iran war — carried roughly one-fifth of the world’s daily oil and liquefied natural gas supply.
Separately, Ukraine’s military reported overnight that Ukrainian drones hit eight tankers belonging to Russia’s so-called “shadow fleet” — a collection of older vessels used to move fuel to Crimea while circumventing international sanctions.
