Oil prices climbed nearly 3 percent on Tuesday, extending a sharp rally as the worsening conflict between the United States and Iran raised fresh concerns over global crude supplies moving through the Strait of Hormuz.
Brent crude rose $1.90, or 2.3 percent, to $85.20 a barrel by 0630 GMT, while US West Texas Intermediate crude gained $1.91, or 2.4 percent, to $80.05 a barrel. Both benchmarks had earlier surged by more than $2 before trimming some gains.
The latest rise came after Brent jumped 9.6 percent in the previous session, marking its biggest single day gain since May 2020. Prices have now reached their highest level in four weeks.
Markets reacted after the US military launched a third straight night of strikes on Iran. President Donald Trump also reinstated a blockade of Iranian shipping and proposed a 20 percent fee to protect vessels passing through the Strait of Hormuz, one of the world’s busiest oil transit routes.
Analysts said the latest developments have significantly increased uncertainty for energy markets.
KCM Trade chief market analyst Tim Waterer said the renewed blockade and Iran’s response had added fresh risks to oil markets, even though shipping through the waterway had not been completely halted.
The security situation worsened after two United Arab Emirates oil tankers were struck by Iranian cruise missiles in Omani waters. One Indian crew member was killed and eight others were injured, according to the UAE Ministry of Defence.
Shipping data also showed tanker traffic through the Strait of Hormuz dropped to its lowest level in two months, raising concerns about possible disruptions to global oil exports.
Analysts said the movement of oil tankers through the narrow waterway will remain the biggest factor for prices in the coming days. Any prolonged disruption could trigger another sharp rally, while uninterrupted exports may ease some of the current risk premium.
Tensions elsewhere in the region also remained high after Yemen’s Houthi movement fired missiles at Saudi Arabia, increasing fears that attacks could spread to more energy infrastructure.
Meanwhile, traders are also watching US inventory data, with a Reuters survey indicating crude stockpiles likely declined last week, suggesting steady demand in the world’s largest oil consumer.
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