SINGAPORE: Oil prices surged nearly 3% on Tuesday, hitting a four-week high as escalating US-Iran military tensions and renewed uncertainty over the Strait of Hormuz raised fears of potential disruptions to global crude supplies.
Brent crude futures rose $1.50, or 1.8%, to $84.80 per barrel, while US West Texas Intermediate (WTI) crude gained $1.70, or 2.2%, to $79.84 per barrel by 0330 GMT.
Both oil benchmarks had earlier climbed more than $2 per barrel before reducing some gains. Brent crude had already jumped 9.6% in the previous session, marking its biggest single-day increase since May 2020.
The latest surge pushed oil prices to their highest level since the United States and Iran signed a memorandum of understanding aimed at ending the conflict on June 17.
The US military carried out a third consecutive night of strikes against Iran on Monday, while US President Donald Trump reinstated a naval blockade targeting Iranian shipping and proposed a 20% protection fee for vessels operating through the Strait of Hormuz.
Read More: Oil prices surge 4%, as U.S.-Iran tensions raise supply concerns
“The latest escalation, including the US reinstatement of the blockade and Iran’s response, has clearly injected fresh risk into the market,” said Tim Waterer, chief market analyst at KCM Trade.
Waterer said that while a complete shutdown of the Strait of Hormuz has not occurred, rising tensions between the two sides have made the global oil supply outlook increasingly uncertain.
The Strait of Hormuz, a critical route for global energy shipments, has become the centre of market concerns as military activity intensifies in the region.
The UAE Ministry of Defence said two Emirati oil tankers were struck by Iranian cruise missiles in the southern section of the Strait of Hormuz in Omani territorial waters. The attack killed one Indian crew member and injured eight others.
Shipping data indicated that tanker traffic through the Strait declined over the past day to its lowest level in two months, increasing fears of possible disruptions to crude exports.
“The key variable to monitor is the physical movement of crude through the Strait of Hormuz,” said Priyanka Sachdeva, an analyst at Phillip Nova.
She warned that any major blockage of tanker routes, prolonged reduction in vessel movement, or disruption to export flows could trigger another sharp increase in oil prices.
However, if crude shipments continue despite rising tensions, some of the current geopolitical premium could gradually ease.
Additional pressure on oil markets came from Yemen’s Houthi movement, which launched missile attacks against Saudi Arabia after accusing Riyadh of targeting an airport under its control.
Analysts warned that any expansion of Houthi attacks toward Saudi oil infrastructure or crude exports through the Red Sea could further threaten regional supply stability.
“If the Houthis extend their attacks to Saudi crude assets, it could create additional uncertainty around oil flows from the region,” said Simon Wong, portfolio manager at Gabelli Funds.
Meanwhile, investors are awaiting US crude inventory data, with a preliminary Reuters poll suggesting that crude oil stockpiles likely declined last week, while gasoline and distillate inventories may have increased.
Market participants are closely watching developments in the Middle East, particularly activity around the Strait of Hormuz, as any disruption to the vital shipping route could have significant consequences for global energy markets.
