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

Oil prices surged on Tuesday as renewed conflict between the U.S. and Iran in the Middle East reignited concerns of supply disruptions from the world's largest crude-producing region. Brent crude futures increased by 56 cents, or 0.6%, to $91.05 a barrel, while U.S. West Texas Intermediate crude rose by 83 cents, or 1%, to $86.59. Brent had peaked at its highest since August 25 and WTI had reached its highest since August 21 in the prior session.

Earlier, President Donald Trump threatened additional strikes against Iran in response to the first direct attacks between the nations in a month, escalating tensions in a conflict that had recently evolved into an economic standoff. These developments brought back the possibility of Iranian retaliation, which in turn increased the likelihood of damage to energy infrastructure around the Gulf and raised uncertainties for shipping through the Strait of Hormuz. Market analysts pointed out that these risks were influencing crude prices to rise further.

On the weekend, the number of visible crude vessels passing through the Strait of Hormuz fell to just five per day, according to shipping data from Kpler. Mediation efforts by Qatar and Oman to restart the Strait of Hormuz, which accounted for approximately one-fifth of global oil supplies before the war began in late February, have thus far been unsuccessful.

The United Kingdom Maritime Trade Operations agency reported on Tuesday that a tanker had been hit by three projectiles while navigating the Strait of Hormuz; however, there were no casualties or environmental damage reported.

The U.S. recently reached a deal with Venezuela to manage the country's oil reserves, a move aimed at bolstering the U.S. Strategic Petroleum Reserve, which is near a 44-year low. Various U.S. energy companies, including Chevron, GE Vernova, ONGC, Eni, and GeoPark, are expected to sign final agreements in Venezuela shortly. As of last week, crude oil inventories in the U.S. Strategic Petroleum Reserve had decreased by about 3.1 million barrels, leaving stockpiles at 286.6 million barrels.

Experts surveyed by Reuters in August anticipate that oil prices will stay above $80 a barrel in 2026 due to ongoing shipping disruptions.