Oil Prices Climb to Four-Week High as US-Iran Tensions Raise Supply Concerns

Oil prices surged to their highest level in four weeks on Tuesday as renewed military confrontation between the United States and Iran intensified concerns over crude supplies moving through the Strait of Hormuz, one of the world’s most important energy shipping routes.

Brent crude futures rose to $84.80 per barrel in early trading, up $1.50 or 1.8 percent, while US West Texas Intermediate crude gained $1.70, or 2.2 percent, to $79.84 a barrel. Earlier in the session, both benchmarks had climbed by more than $2 before trimming some of those gains.

The latest rally follows a sharp rise in the previous trading session, when Brent crude jumped 9.6 percent, marking its biggest daily increase since May 2020. Prices have now reached their highest level since the United States and Iran signed a memorandum of understanding on June 17 aimed at ending their conflict.

Market sentiment has shifted after the United States carried out a third consecutive night of military strikes against Iran on Monday. At the same time, US President Donald Trump reinstated a naval blockade targeting Iranian shipping and proposed a 20 percent fee for vessels using the Strait of Hormuz under US protection.

Analysts said the latest developments have significantly increased uncertainty surrounding global oil supplies.

“The latest escalation, including the US reinstatement of the blockade and Iranian responses, has clearly injected fresh risk into the market,” said Tim Waterer, chief market analyst at KCM Trade.

He noted that while the strategic waterway remains open, uncertainty over military activity has clouded the outlook for energy exports.

Tensions increased after the UAE’s Ministry of Defence confirmed that two Emirati tankers were struck by Iranian cruise missiles while transiting the southern shipping lane of the Strait of Hormuz in Omani territorial waters. The attack killed one Indian crew member and injured eight others, adding to concerns over maritime security.

Shipping data released on Monday also showed that tanker traffic through the Strait of Hormuz had fallen to its lowest level in two months, highlighting growing caution among shipping operators.

Phillip Nova analyst Priyanka Sachdeva said the movement of crude through the Strait would remain the key factor influencing prices.

She said any significant disruption to tanker traffic or export flows could trigger another sharp increase in oil prices. However, if shipments continue despite the conflict, part of the geopolitical risk premium currently supporting the market could gradually decline.

Regional tensions widened after Yemen’s Houthi movement launched missiles toward Saudi Arabia, accusing the Kingdom of carrying out an airstrike on an airport under Houthi control. Market participants are closely watching whether attacks could spread to oil infrastructure in the Red Sea.

Meanwhile, investors are awaiting official US inventory data after a preliminary Reuters survey indicated that crude oil stockpiles likely declined last week, while gasoline and distillate fuel inventories were expected to increase, offering another indicator of supply and demand conditions in the world’s largest oil-consuming nation.