Oil Prices Rebound as Strait of Hormuz Disruptions Fuel Supply Concerns

Oil prices climbed more than two percent on Tuesday, recovering some of the losses recorded in the previous session, as concerns over supply disruptions intensified amid ongoing tensions in the Middle East.

Brent crude futures rose $2.62, or 2.61 percent, to $102.80 a barrel, while US West Texas Intermediate crude gained $2.51, or 2.51 percent, to $96.01 during afternoon trading. The rebound followed a sharp drop a day earlier, when Brent fell 2.8 percent and WTI slid 5.3 percent after limited tanker movement through the Strait of Hormuz briefly eased fears.

The Strait of Hormuz remains largely disrupted as the conflict involving United States, Israel and Iran entered its third week. The narrow waterway is a key route for nearly 20 percent of the world’s oil and liquefied natural gas shipments, making any disruption a major concern for global energy markets.

Analysts warned that risks to supply remain high. Tony Sycamore, a market analyst at IG, said even a single incident involving tankers could quickly escalate the situation again. Priyanka Sachdeva of Phillip Nova said markets are focused on how long the conflict will last and the extent of damage to oil infrastructure in the Gulf region.

Efforts to secure the passage of tankers have faced challenges. Several US allies declined a request from Donald Trump to send warships to escort vessels through the Strait of Hormuz, prompting criticism from Washington. The lack of coordinated action has added to uncertainty in the oil market.

Prices also found support after a drone attack triggered a fire at the Fujairah Oil Industry Zone in the United Arab Emirates. No injuries were reported, but the incident raised fresh concerns about the vulnerability of key energy infrastructure in the region.

Middle Eastern crude benchmarks have surged to record levels in recent days, reflecting tighter supply conditions. The disruption has forced the UAE, one of the largest producers in the Organization of the Petroleum Exporting Countries, to cut output by more than half, according to sources.

Diplomatic efforts are also under way to ease tensions around shipping routes. Iran has reportedly asked India to release three tankers seized earlier this year as part of negotiations aimed at ensuring safe passage for vessels linked to India.

The International Energy Agency has indicated that additional oil could be released from strategic reserves if needed, adding to the 400 million barrels already approved for release.

Meanwhile, Israel signalled that military operations could continue for several more weeks, carrying out further strikes across Iran. The prospect of a prolonged conflict continues to weigh on global markets, with investors closely watching developments in the region.