Oil Prices Rise Amid Iran-Israel Tensions Despite Stable Supply Flows

Oil prices edged higher on Tuesday as markets reacted to heightened tensions in the Middle East following recent attacks linked to the Iran-Israel conflict. While the region’s key oil and gas infrastructure has largely remained intact, concerns over potential disruptions have injected fresh volatility into global energy markets.

Brent crude futures rose by $1.23, or 1.7%, reaching $74.46 a barrel as of 12:23 p.m. Saudi time. U.S. West Texas Intermediate (WTI) crude was also up, gaining $1.08, or 1.5%, to settle at $72.85. Both benchmarks had climbed over 2% earlier in the session before paring gains and rebounding in a turbulent day of trading.

The conflict’s escalation over the weekend raised alarms in the energy sector after Israel reportedly struck Iran’s Shahran oil depot and caused a fire at the South Pars gas field — a critical site that Iran shares with Qatar. As a result, Iran partially suspended gas production at the facility, although no significant impact has yet been recorded on global energy flows.

“The market is largely worried about disruption through the Strait of Hormuz, but the risk of that is very low,” said Ole Hansen, head of commodity strategy at Saxo Bank. “Iran would be hurting its own revenues by attempting to close the Strait, and the U.S. is focused on keeping oil prices and inflation down.”

Tensions in the region flared further after two oil tankers collided and caught fire near the Strait of Hormuz on Tuesday. The incident, which occurred in an area already experiencing increased electronic interference, has underscored the operational risks for energy shipping companies in the Gulf.

Despite the geopolitical concerns, broader supply dynamics continue to suggest market stability. In its monthly oil report released Tuesday, the International Energy Agency (IEA) lowered its global oil demand forecast by 20,000 barrels per day, while increasing the expected supply growth to 1.8 million barrels per day — up 200,000 from last month’s estimate.

Traders are also keeping an eye on global monetary policy developments. The U.S. Federal Reserve’s Open Market Committee is scheduled to meet later today, with decisions on interest rates likely to influence broader market sentiment, including commodity prices.

While current oil flows remain undisrupted, the geopolitical uncertainty in the Middle East and shifts in global supply and demand projections are expected to keep energy markets on edge in the coming weeks.