Oil prices rise as latest fighting resurrects Middle East supply disruption risks

Oil prices surged on Tuesday amidst renewed fears of supply disruptions from the Middle East as fighting between the US and Iran resumed. Brent crude futures climbed 56 cents, or 0.6%, to $91.05 a barrel, while US West Texas Intermediate crude increased 83 cents, or 1%, to $86.59. Brent had closed up 2.7% on the previous session, touching a high not seen since August 25, and WTI settled up 2.8%, reaching its highest mark since August 21.

On Monday, US President Donald Trump had threatened further strikes against Iran after direct attacks between the nations occurred for the first time in a month on Sunday, heightening tensions in a conflict that had recently evolved into an economic standoff. Tim Waterer, chief market analyst at KCM, stated that these events brought Iranian retaliation into play, thereby raising the possibility of damage to energy infrastructure around the Gulf and adding fresh uncertainty for shipping through the Strait of Hormuz.

Such risks are reflected in the firmer tone of crude prices, he added. The number of visible commodity vessels crossing the Strait of Hormuz fell to five per day over the weekend, according to shipping data from Kpler. Mediators such as Qatar and Oman have so far failed to broker a deal to reopen the Strait of Hormuz, which had carried approximately a fifth of global oil supplies before the war began in late February.

Iran closed the waterway following US and Israeli strikes on February 28. The UK Maritime Trade Operations agency reported on Tuesday that a tanker had been hit by three projectiles while navigating the Strait of Hormuz, although there were no casualties or environmental damage. On Friday, Trump announced a deal with Venezuela to manage oil reserves in the country, a move aimed at replenishing the US Strategic Petroleum Reserve, which is near a 44-year low.

Chevron, GE Vernova, ONGC, Eni, and GeoPark from Colombia were reportedly close to finalizing energy projects in Venezuela after months of negotiations. As of last week, crude oil inventories in the US Strategic Petroleum Reserve dropped by around 3.1 million barrels, leaving stockpiles at 286.6 million barrels. Analysts surveyed by Reuters in August predict that oil prices will stay above $80 a barrel in 2026 due to ongoing shipping disruptions.