Oil Prices Surge Amid Strait of Hormuz Crisis
Il prices climbed for a third consecutive day on Tuesday. The widening US–Israel conflict with Iran has intensified fears. There are escalating threats to shipping through the Strait of Hormuz. This has raised concerns of major supply disruptions from the world’s most critical energy corridor.
Brent crude futures rose to $79.44 per barrel, up $1.70 or 2.2% by 04:00 GMT. On Monday, Brent surged as high as $82.37 — its highest level since January 2025 — before paring gains to settle 6.7% higher.
US West Texas Intermediate (WTI) crude advanced $1.17, or 1.6%, to $72.40 per barrel. In the earlier session, WTI initially hit its highest since June 2025 before closing 6.3% higher.
Strait of Hormuz Crisis Drives Oil Price Surge
Roughly 20% of global oil and gas flows through the Strait of Hormuz. This makes it one of the most strategically vital chokepoints in the global energy market.
According to analysts at ING, markets are increasingly pricing in the risk of prolonged escalation. Iranian media reported that a senior Revolutionary Guards official declared the waterway closed. The official warned that any vessel attempting passage will be targeted.
Insurers have reportedly withdrawn coverage for ships transiting the area, prompting tankers and container vessels to reroute where possible. Shipping and freight costs have surged as risk premiums spike across the energy complex.
Tony Sycamore, market analyst at ING, noted that there is no immediate de-escalation in sight. Iran is allegedly targeting regional energy infrastructure. As a result, upside risks for oil prices stay elevated. This is particularly true if disruptions extend beyond shipping into production and refining assets.
Broader Middle East Escalation Adds to Supply Fears
The conflict expanded on Monday. Israeli forces reportedly struck targets beyond Iran, including Lebanon. Iran responded with attacks on Gulf energy infrastructure. They also targeted vessels operating near the Strait of Hormuz.
Israeli Prime Minister Benjamin Netanyahu stated that the war will take “some time.” He signaled that markets should prepare for sustained geopolitical risk. This will not be a short-lived shock.
Energy analysts warn that temporary shipping disruptions can drive short-term price spikes. Nevertheless, a broader attack on oil fields, export terminals, or refineries would pose a more severe and prolonged supply shock.
Oil Price Forecast: How High Can Crude Go?
Investment firm Bernstein raised its 2026 Brent crude price assumption from $65 to $80 per barrel. Analysts predict Brent will reach $120–$150 per barrel. This would happen in an extreme scenario involving prolonged regional conflict and structural supply outages.
Such levels would significantly impact global inflation, central bank policy decisions, and economic growth expectations.
Refined Products and Diesel Futures Spike
The Middle East is also a major supplier of refined fuels, and processing facilities are increasingly viewed as vulnerable.
On Monday, Saudi Arabia reportedly shut its largest domestic refinery following a drone strike, further tightening fuel markets.
- US ultra-low-sulfur diesel futures jumped 4.2% to $3.0207 per gallon after hitting a two-year high.
- Gasoline futures rose 1.7% to $2.4113 per gallon.
- European gasoil futures gained 4.3% to $925 per metric ton, after soaring 18% in the previous session.
What Traders and Investors Should Watch
With oil prices rising for three straight sessions, markets are now focused on:
- Confirmation of any sustained Strait of Hormuz closure
- Further attacks on energy infrastructure
- OPEC+ response and potential emergency output measures
- US strategic petroleum reserve policy decisions
- Impact on inflation and global monetary policy
If disruptions stay limited to shipping risk premiums, crude will stabilize below recent highs. But, if physical supply outages materialize, oil markets will enter a new structural bull phase.
For energy traders and long-term investors, volatility is to stay elevated in the coming days. Geopolitical headlines will drive intraday swings. These headlines will reshape the global oil price outlook.
