Oil prices jumped Tuesday after the U.S. military struck Iranian targets in the Strait of Hormuz, responding to overnight attacks Tehran launched on tankers moving through the waterway. WTI and Brent both hit their highest levels in weeks, while the International Energy Agency's tighter supply outlook and a squeeze on diesel added further pressure to the market.
U.S. Central Command said forces began striking Islamic Revolutionary Guard Corps targets in Iran early Tuesday afternoon, a response to attempted IRGC attacks on commercial shipping in the strait and on American service members in the region. The West Texas Intermediate contract for October delivery advanced 4.3% to $89.46 a barrel, its highest level in over a month. The November Brent contract climbed 3.8% to $94.36 a barrel, also its highest in almost two weeks.
Tankers hit as traffic through the strait thins
Earlier Tuesday, reports emerged that two oil tankers in the strait were struck by projectiles amid a sharp decline in commercial-vessel traffic through the route. The strikes followed a weekend exchange in which the U.S. hit Iran's Larak Island and Tehran retaliated against two U.S. military bases in Jordan, the first direct fighting between the two sides in about a month. Trump had threatened further strikes against Iran on Monday, before Tuesday's escalation.
Supply outlook tightens, diesel spikes
The International Energy Agency cut its 2026 global oil supply forecast to 102 million barrels a day in August, a decline of 4.3 million barrels a day on the year, citing the collapsed ceasefire and the renewed closure of the strait. The agency projected a global oil market deficit of 1.8 million barrels a day in Q3 2026. U.S. diesel futures, meanwhile, traded near a 52-month high after climbing about 51% over the past ten weeks, pushing the refining crack spread to a record near $106 a barrel, according to LSEG data cited by Reuters.
Technical picture points higher
The setup for crude has strengthened further, according to Fawad Razaqzada, a market analyst at Forex.com, who said prices have repeatedly broken through resistance after brief sideways moves. According to Forex.com: "WTI is now testing the important $86.50-$88.50 region." He added that a sustained break above that level would be technically significant and could signal the start of a larger move higher.
Sources: MarketWatch, Reuters via Investing.com, Quartz via Yahoo Finance
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