Oil extends gains as Trump threatens further Iran strikes

Oil prices skyrocketed on Tuesday as the U.S. military announced additional strikes on Iran, escalating tensions between the two nations. Brent crude futures surged 5% to $95.05 a barrel, while U.S. West Texas Intermediate crude futures rose 5.7% to $90.68 a barrel, reaching the 490 mark for the first time since June 11. U.S. Central Command confirmed launching attacks against Islamic Revolutionary Guard Corps (IRGC) targets, with Iranian state media claiming the strikes hit a facility in Qeshm and non-military sites in Hormozgan.

The conflict stemmed from control battles over the Strait of Hormuz, with President Donald Trump previously favoring economic sanctions over military action. However, recent U.S. strikes resumed, targeting mines laid by IRGC forces in the Strait and an attack on a Jordanian military base. Trump vowed further retaliation if Iran retaliates, stating that the U.S. will "hit again at a much harder and higher level."

The sudden return of military action raised concerns of supply disruptions, as only five vessels crossed the Strait on Monday and Kpler reported low transit levels. A tanker was hit by three projectiles while exiting the strait, highlighting ongoing risks to shipping. Meanwhile, OPEC+ production increases failed to address supply concerns, and Russia's extension of a diesel export ban until September 30 added to refined fuel supply worries.

Trump also announced a new deal with Venezuela to replenish the U.S. Strategic Petroleum Reserve, though the immediate impact remains uncertain.