Oil prices saw a significant increase, with Brent crude rising by 2 percent to top $92 a barrel on Tuesday, following a more than 2.5 percent gain the previous day. This surge is attributed to the first exchanges of fire between the United States and Iran in over a month. Brent crude for November delivery stood at $92.31 a barrel as of 08:45 GMT, up from just over $88 a barrel when markets closed on Monday. The price climb was sparked by US strikes on Iran's Larak Island and subsequent Iranian attacks on two US bases in Jordan.
US President Donald Trump pledged a response to Iran's strikes on the King Hussein and Al Azraq bases in Jordan, further escalating tensions. The United Kingdom Maritime Trade Operations reported that a tanker in the Strait of Hormuz, a critical conduit for about one-fifth of global oil supplies, was struck by three unknown projectiles. This strait has been a focal point of attacks by Iranian forces on commercial shipping. The conflict's escalation has dented hopes for a return to pre-war levels of maritime traffic, with traffic in the Strait of Hormuz remaining heavily constrained; there were 107 transits from August 24 to August 30, down from 121 the prior week.
Saul Kavonic, head of energy research at MST Financial, noted that hopes for a near-term deal to open the strait have faded, suggesting a potential "no war, no peace" situation that could last well into 2027, with only partial oil volumes flowing through the strait. Tony Sycamore, a senior market analyst at IG Markets, believes oil's path of least resistance is higher in the short term due to the recent skirmishes and the risk of further exchanges of fire. However, Sycamore also noted that if the flare-up subsides by the weekend and "dark" shipments and ship-to-ship transfers resume, the current geopolitical premium on oil prices could be quickly stripped out. The situation is described as a "day-to-day proposition" given the volatility.
