Crude Prices Surge on Escalation of US-Iran Hostilities

Crude oil prices experienced a significant surge on Tuesday following the escalation of hostilities between the US and Iran. Two oil supertankers were targeted by projectiles while attempting to exit the Strait of Hormuz. This came after the US struck Iranian rocket launchers preparing to send mines into the Strait and Iran retaliated by firing missiles and drones at US bases in Jordan and the United Arab Emirates.

The US launched additional strikes against targets in Iran in response to Iran's actions, including placing mines in the Strait of Hormuz and striking US military bases in Jordan and the United Arab Emirates. Iran threatened severe punishment and vowed to target US bases and interests in the Middle East in retaliation. The tensions also included Israeli attacks on Iran-backed Hezbollah in Lebanon and Iran attacking Israeli-backed Hamas in Gaza.

The International Energy Agency reported that the global oil supply deficit will worsen due to ongoing disruptions from the US-Iran war. Russian crude production, already hit by Ukrainian drone attacks, is further threatened by Russia's preparation to escalate attacks on Ukraine. This has led to concerns about potential disruptions to oil supplies from the Middle East, as OPEC+ approved a production increase of +188,000 bpd for September, but faces challenges due to renewed US-Iran military attacks.