Oil prices surged on Tuesday after the U.S. military carried out fresh strikes on Iranian targets, marking a sharp escalation after a weeks-long pause in direct military action. WTI crude topped $90 a barrel for the first time since June, while Brent settled above $95, as supply concerns tied to the Strait of Hormuz intensified.
Brent crude futures expiring in November jumped 5% to settle at $95.05 a barrel on Tuesday. U.S. West Texas Intermediate crude futures expiring in October climbed 5.7% to settle at $90.68 a barrel, topping the $90 mark for the first time since June 11.
Strikes resume after weeks of calm
U.S. Central Command said on Tuesday it had launched strikes against Islamic Revolutionary Guard Corps targets, while Iranian state media said the attacks hit a factory in Qeshm and non-military targets in Hormozgan. The U.S. and Iran had been at an impasse over control of the Strait of Hormuz heading into last weekend, and President Donald Trump had appeared to shift his approach from military strikes to economic warfare.
However, kinetic action resumed on Sunday for the first time since July, after CENTCOM took what it called limited, precise action against IRGC forces laying mines in the Strait of Hormuz. Iran retaliated by carrying out strikes against U.S. military bases in Jordan, and Jordanian state media separately reported the interception and destruction of eight missiles.
Trump warns of harsher response
Trump said on Tuesday that the latest U.S. strikes were in response to the minelaying attempt and the attack on the Jordan military base. On his Truth Social service, he warned that Iran would face escalating consequences, saying "there will be very little left of the Islamic Republic of Iran" if Tehran retaliates again.
Iran did retaliate, with state media saying the IRGC had hit Camp Titin, a U.S. Marine base in Jordan, with ballistic missiles.
Shipping risk deepens supply concerns
The end of the weeks-long lull in direct military action sharply added to supply disruption concerns, even as ship transits through the Strait of Hormuz remain at historically low levels. Kpler said there were only five confirmed vessel crossings on Monday. A tanker was also struck by three unidentified projectiles on Monday while exiting the strait, according to the United Kingdom Maritime Trade Operations.
These risks have partly overshadowed efforts by OPEC+ producers to raise output. The group approved an additional production quota increase of about 188,000 barrels per day from September, completing the planned rollback of earlier voluntary cuts. Russia's decision over the weekend to extend its diesel export ban until Sept. 30 also added to concerns over refined fuel supplies.
Trump said on Sunday that oil secured under a newly announced deal with Venezuela would be used to replenish the U.S. Strategic Petroleum Reserve, which has fallen to its lowest level in 44 years. It remains unclear how quickly the Venezuelan deal could translate into additional crude supplies.
Source: Investing.com
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