Oil prices have surged significantly due to rekindled hostilities between the US and Iran. Brent crude futures rose $4.16, or 4.6%, to settle at $94.65 a barrel, while U.S. West Texas Intermediate (WTI) crude increased $4.46, or 5.2%, to settle at $90.22. These represent the highest closing prices for Brent since July 24 and for WTI since July 23, with prices continuing to climb on Wednesday, pushing Brent above $95.47 and WTI to $90.72.
The escalation followed new US airstrikes on Iranian targets, retaliating for alleged attacks on shipping and a US military base in Jordan. US President Donald Trump announced "large and powerful" strikes near the Strait of Hormuz, citing Iranian sea mines and missile attacks. Iran has pledged retaliation, leading Kuwait, Jordan, and Bahrain to sound alerts and intercept missiles. Analysts like Kyle Rodda from Capital.com noted that "Renewed hostilities in the Middle East sent crude prices surging, driving Wall Street lower and global bond yields to multi-year – and in some instances, multi-decade – highs."
Concerns about supply disruptions, particularly through the Strait of Hormuz, a critical waterway for about a fifth of global oil exports, are driving the price increases. Vessel crossings through the Strait of Hormuz dropped sharply, from 23 last Wednesday to 10 on Monday and only five on Tuesday, according to Kpler data. The US also warned of tougher sanctions against Iran, which analysts believe is a key factor in Iran's "lashing out kinetically" as described by US Treasury Secretary Scott Bessent. Daniel Richards, senior economist at Emirates NBD, stated, "Any perceived threat to Gulf shipping lanes will keep an oil-risk premium in place."
