Oil prices have surged due to renewed direct hostilities between the United States and Iran, following a month-long ceasefire that ended in mid-August. Brent crude, the international benchmark, rose by 2 percent on Tuesday to over $92 a barrel, extending a previous 2.5 percent gain, and stood at $92.31 a barrel as of 08:45 GMT for November delivery. This increase is a direct response to recent US strikes on Iran's Larak Island and Iranian ballistic missile attacks on American positions in Jordan, as well as a tanker being struck by three unknown projectiles in the Strait of Hormuz.
The flare-up in tensions comes despite a recent rebound in oil flows through the Strait of Hormuz, which had reached two-thirds of pre-war levels, or about 15 million to 16 million barrels per day. This recovery, reported by Bloomberg citing Goldman Sachs and Reuters, is now imperiled by the latest attacks. The Strait, a critical conduit for approximately one-fifth of global oil supplies, has seen reduced traffic, with many vessels sailing "dark" to avoid detection. While 107 transits occurred between August 24 and August 30, this was down from 121 the previous week.
Analysts are expressing concern about the long-term outlook. Saul Kavonic, head of energy research at MST Financial, noted that hopes for a near-term deal to open the Strait have faded as the conflict appears to be escalating. He suggested that the oil market is increasingly realizing it may be entering a protracted "no war, no peace" situation, where only partial volumes flow through the Strait, potentially lasting into 2027. Tony Sycamore, a senior market analyst at IG Markets, believes that the path of least resistance for oil in the short term is higher due to the latest skirmish, though prices could ease if "dark" shipments increase and the geopolitical premium dissipates.
