Middle East live: Oil prices extend gains as US-Iran tensions flare again

On September 1, oil prices surged as renewed conflict between the United States and Iran in the Middle East reignited concerns over potential supply disruptions from the region's primary crude producer. Brent crude futures surged 56 cents, or 0.6%, to $91.05 a barrel, while US West Texas Intermediate crude rose 83 cents, or 1%, to $86.59. In the prior session, Brent had climbed 2.7%, peaking since August 25, and WTI had increased 2.8%, reaching its highest level since August 21.

The tension flared following US President Donald Trump's threats of additional strikes against Iran in response to the first direct attacks between the nations in a month, on August 30. These developments raised the possibility of Iranian retaliation, increasing risks to energy infrastructure in the Gulf and uncertainty for shipping through the Strait of Hormuz. This heightened uncertainty is reflected in the more robust tone of crude prices, according to Tim Waterer, chief market analyst at KCM.

During the weekend, the count of visible commodity vessels passing through the Strait of Hormuz fell to five per day, according to Kpler's shipping data. Mediation efforts, including those from Qatar and Oman, to negotiate a resolution to reopen the Strait of Hormuz, which transports approximately one-fifth of global oil supplies since the conflict began in late February, have not yet borne fruit. Iran sealed off the waterway following US and Israeli attacks on February 28.

Highlighting the ongoing risks to shipping and oil supply, the United Kingdom Maritime Trade Operations agency (UKMTO) reported on September 1 that a tanker had been hit by three projectiles while navigating out of the Strait of Hormuz. No injuries or environmental damage were recorded. On August 28, Trump announced a deal with Venezuela to oversee the country's oil reserves, which he later claimed would aid in replenishing the US Strategic Petroleum Reserve, which is close to a 44-year low.

Various US oil companies, such as Chevron and GE Vernova, India's ONGC, Italy's Eni, and Colombia's GeoPark, are in the process of finalizing energy agreements in Venezuela, according to five sources familiar with the negotiations. As of last week, crude oil inventories in the US Strategic Petroleum Reserve fell by around 3.1 million barrels, leaving stockpiles at 286.6 million barrels.

The Reuters poll of analysts in August predicts that oil prices will stay above $80 a barrel in 2026 due to persistent shipping disruptions.