Crude oil prices climbed around 2 per cent on Tuesday, reaching their highest level in four weeks as escalating hostilities between the United States and Iran and renewed disruptions around the Strait of Hormuz raised concerns over global energy supplies. Brent crude futures rose $1.68, or 2 per cent, to $84.98 per barrel, while US West Texas Intermediate (WTI) crude advanced $1.65, or 2.1 per cent, to $79.79 per barrel. In the previous session, Brent had surged 9.6 per cent, its biggest single-day jump since May 2020.
Oil prices are now at their highest levels since the two countries signed a memorandum of understanding on June 17 aimed at ending the conflict. The latest rally has helped crude recover part of the roughly 30 per cent decline recorded during the second quarter.
Strait Of Hormuz Tensions Fuel Supply Concerns
Two UAE tankers were struck by Iranian cruise missiles in the southern shipping lane of the Strait of Hormuz within Omani territorial waters on Monday, according to the UAE Ministry of Defence. The attack killed one Indian crew member and injured eight others. US President Donald Trump has announced the reinstatement of a blockade on Iranian shipping. The Joint Maritime Information Center said the US Central Command would begin enforcing a blockade on all Iranian ports and coastal areas from 4 pm New York time on Tuesday.
During a brief pause between two US naval blockades, Iran exported at least 57 million barrels of crude, highlighting the significance of its supplies to the global oil market. Iranian forces also launched drones at US assets in Kuwait and fired cruise missiles at what they described as a hostile vessel. Meanwhile, Tehran said its agreement with Washington had entered a crisis phase and that it would no longer honour the deal as long as the US continued to violate its commitments.
Gulf oil producers had recently started increasing crude exports after an interim agreement eased concerns over shipments. The UAE boosted production to 3.8 million barrels per day in June from 1.71 million barrels per day in May as it found ways to navigate disruptions caused by the conflict.