Oil prices have risen due to escalating tensions in the Middle East following recent exchanges of fire between the United States and Iran. Brent crude, the international benchmark, rose more than 1 percent on Tuesday, reaching over $91 a barrel, building on a more than 2.5 percent gain from the previous day. As of 05:00 GMT, Brent scheduled for November delivery was priced at $91.44 a barrel, up from just over $88 when markets closed on Monday.
The increase in oil prices comes after US strikes on Iran’s Larak Island and Iranian attacks on two bases used by US forces in Jordan. In a television interview on Monday, US President Donald Trump stated, "We’re going to hit them hard" in response to the attacks on the King Hussein and Al Azraq bases in Jordan.
The United Kingdom Maritime Trade Operations reported that a tanker was struck by three unknown projectiles while crossing the Strait of Hormuz, although no casualties were reported and no group has claimed responsibility for the attack. The Strait of Hormuz is a critical route for about one-fifth of global oil supplies in peacetime.
Since the expiration of a 60-day ceasefire between the US and Iran in mid-August, oil prices have been volatile. Saul Kavonic, head of energy research at MST Financial, noted that hopes for a near-term deal to open the strait have diminished, suggesting a prolonged "no war, no peace" situation could persist, affecting oil flow through the strait until 2027.
Traffic in the Strait of Hormuz has been heavily constrained, with many vessels operating with their Automatic Identification System turned off to avoid detection. From August 24 to August 30, the strait saw 107 transits, down from 121 the previous week, according to MarineTraffic.
Tony Sycamore, a senior market analyst at IG Markets, indicated that oil prices might decrease if "dark" shipments increase in the strait. He stated that while the current geopolitical situation may push prices higher in the short term, a reduction in tensions could lead to a quick adjustment in prices. "Overall, what we are dealing with is a day-to-day proposition," Sycamore added.