Global oil prices surged 2% on Tuesday, hitting a four-week peak as tensions between the United States and Iran intensified in the Strait of Hormuz, raising fresh concerns about the stability of energy supplies worldwide.
Brent crude futures gained $1.68, or 2%, reaching $84.98 per barrel by 0051 GMT. U.S. West Texas Intermediate crude also climbed $1.65, or 2.1%, to $79.79 per barrel. The gains follow an extraordinary 9.6% single-day spike in Brent crude during the previous session — the largest daily increase since May 2020.
Prices are now at their highest point since the two nations signed a memorandum of understanding on June 17 to bring their conflict to an end.
The latest flashpoint came Monday when two tankers belonging to the United Arab Emirates were struck by Iranian cruise missiles in the southern lane of the Strait of Hormuz, within Omani territorial waters. The UAE Ministry of Defence confirmed the attack, which killed one Indian crew member and left eight others injured.
U.S. President Donald Trump told reporters that the United States had brought back its blockade of Iranian shipping. He also stated that he expected other nations benefiting from U.S. protection in the strait to help cover the cost of those efforts.
Tim Waterer, chief market analyst at KCM Trade, described the situation as a significant new risk for energy markets. “The latest escalation, including the U.S. reinstatement of the blockade and Iranian responses, has clearly injected fresh risk into the market,” he said. “While a full closure hasn’t occurred, the competing objectives of both sides have made the supply picture highly uncertain,” Waterer added.
U.S. Central Command reported that it launched a third straight night of strikes against Iran. Meanwhile, Iran’s semi-official YJC news agency reported early Tuesday that seven explosions were heard in the port city of Bandar Abbas, with two additional blasts reported on Kish Island.
Adding to regional instability, Yemen’s Houthi movement launched missiles toward Saudi Arabia after accusing the kingdom of striking an airport under Houthi control on Monday.
Simon Wong, a portfolio manager at Gabelli Funds, warned in a note that “if the Houthis extend their attacks to Saudi’s crude products in the Red Sea, it could put (further) uncertainties on crude flows from the region.”
On the domestic supply front, a preliminary Reuters poll conducted Monday suggested that U.S. crude oil stockpiles likely declined last week, while gasoline and distillate inventories were expected to have increased.
