Oil up around 2% as renewed US-Iran strikes stoke supply fears

Oil prices surged nearly 4% to a one-week high on Tuesday as renewed US-Iranian conflict heightened fears of Middle East supply disruptions. Brent futures increased $3.44, or 3.8%, to $93.93 a barrel, while US West Texas Intermediate crude rose $3.72, or 4.3%, to $89.48. This pushes Brent close to its highest close since August 20 and WTI near its highest close since July 23.

The US launched new air strikes on Iranian targets on Tuesday, quashing hopes that recent exchanges of fire might not herald a wider resumption of hostilities. Despite this, Iran remains defiant, warning it will prevent oil exports from the Gulf, even as President Trump threatened harsh retaliation. US Treasury Secretary Scott Bessent warned of forthcoming new sanctions.

Strikes by the US against Islamic Revolutionary Guard Corps in Iran follow previous attacks by the IRGC against shipping in the Strait of Hormuz and American service members. This raises concerns about prolonged disruptions to energy flows through the Strait. Analyst Ole Hansen from Saxo Bank noted the heightened worries about energy supply.

Diesel prices also spiked, reaching a 52-month high in the US after soaring 51% over the past 10 weeks, which boosted refining profit margins to a record high near $106 a barrel. Meanwhile, Russia, the world's third-biggest crude oil producer, struck Kyiv and surrounding regions, marking the sixth day of intense attacks on the Ukrainian capital.