Oil settled at a five-week high on Tuesday after the U.S. launched new air strikes on Iranian targets, reviving fears of prolonged supply disruption through the Strait of Hormuz. Brent and WTI both jumped more than 4% as diesel prices spiked to a 52-month high.
Brent futures rose $4.16, or 4.6%, to settle at $94.65 a barrel. U.S. West Texas Intermediate crude climbed $4.46, or 5.2%, to $90.22. That marked the highest close for Brent since July 24 and for WTI since July 23.
U.S. strikes reignite the conflict
The U.S. Central Command said U.S. forces began striking Islamic Revolutionary Guard Corps targets in Iran on Tuesday, following attempted attacks by the IRGC on commercial shipping in the Strait of Hormuz and on American service members in the region. The strikes quashed hopes that a weekend exchange of fire, the first direct clash between the two countries since July, would not widen into renewed hostilities.
Prices had already climbed after reports that two tankers were hit while leaving the Strait of Hormuz, the waterway Iran has effectively closed to shipping. Tehran remained defiant, warning it would prevent oil exports from the Gulf. President Donald Trump threatened to hit Iran "hard" in response, and Treasury Secretary Scott Bessent warned Washington was about to impose new sanctions. According to Reuters: "raised concerns about prolonged disruptions to energy flows through the Strait of Hormuz", Saxo Bank analyst Ole Hansen said of the fresh hostilities.
Diesel margins hit a record
Refinery disruptions in the Middle East and Russia have pushed diesel prices sharply higher. U.S. diesel futures jumped to a 52-month high on Tuesday after soaring 51% over the past ten weeks, lifting the diesel crack spread, which measures refining profit margins, to a record around $107 a barrel. Russian air attacks also killed 12 people in Kyiv and the surrounding region early Tuesday, marking the sixth straight day of intense strikes on the Ukrainian capital. Russia was the world's third-biggest crude oil producer behind the U.S. and Saudi Arabia in 2025 and remains a member of OPEC+.
Inventories tell a more mixed story
Even so, the physical crude picture looks less tight than the price action suggests. U.S. commercial crude inventories built by 21.9 million barrels over three weeks to 428.9 million, 1% above the five-year average. Globally, though, observed oil inventories fell below 7.9 billion barrels for the first time since April 2025, a decline concentrated in floating cargoes rather than onshore stocks. Analysts estimated energy firms pulled 0.8 million barrels of crude from storage during the week ended August 28, which would be the first decline in five weeks.
Sources: Investing.com (Commodities & Futures News), Investing.com (Commodities Analysis & Opinion)
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