The price of oil is rising as the US-Israeli war against Iran escalates supply risks
Brent rose by more than $3 Tuesday, marking a third consecutive day of gains. The U.S. - Israel conflict?with Iran?and threats to shipping via the Strait of Hormuz?increased fears of'supply.disruptions' from the Middle East.
Brent crude futures stood at $80.89 per barrel by 0745 GMT, an increase of $3.15 or 4.1%. The contract reached $82.37 on Monday, its highest level since January 2025. However, it retraced these gains and settled 6.7% higher.
U.S. West Texas Intermediate Crude climbed $2.55 or 3.6% to $73.78 per barrel. The contract reached its highest level since June 2025 in the previous session before falling back and settling at 6.3%.
Tony Sycamore said that the upside risks are still present and will only increase the longer the conflict continues.
On Monday, the U.S.-Israeli air war against Iran expanded as Israel attacked Lebanon and Iran responded with strikes against energy infrastructure and tankers in Gulf countries.
As insurers cancel their coverage, tankers and container vessels are also avoiding this waterway. Meanwhile, global oil and shipping rates have increased. Concerns over transiting the waterway grew after Iranian media reported that on Monday a senior Iranian Revolutionary Guards officer said that the Strait of Hormuz was closed and warned Iran would fire on any ship attempting to pass.
Around 20% of world oil and gas passes through the Strait of Hormuz.
In a Tuesday note, ING analysts said that the market continued to digest the risks of escalation.
While there is concern about oil flowing through the Strait of Hormuz - a greater threat to the market comes from Iran's targeting of additional energy infrastructure in this region. This could result in longer outages."
Benjamin Netanyahu, Israeli Prime Minister, said on Monday that while the war between Israel and the United States against Iran will take a "little time", it won't take years.
Analysts predict that oil prices will remain high in the days to come, as markets continue to focus on the effects of the Middle East conflict.
Bernstein raised its Brent oil price assumptions for 2026 from $65. However, Bernstein sees the prices rising to $120-$150 if a prolonged conflict occurs.
The future of refined products is also improving, as the Middle East has become a major supplier of fuels. Their processing facilities are in danger. Saudi Arabia closed its largest domestic oil refinery on Monday after a drone attack.
U.S. ultra-low sulfur diesel futures rose 8.3% to $3.1404 per galon, after reaching a 2-year high on Sunday. Meanwhile, gasoline futures increased 3.8% to $2.4620 per galon following a 3.7% increase in the previous session.
After gaining 18% on the previous day, European gasoil contracts gained 9.2%. (Reporting from Anushree Mukherjee, Bengaluru; Emily Chow, Singapore; Editing done by Christian Schmollinger Stephen Coates Muralikumar Anantharaman
(source: Reuters)
