Oil Prices Rise as U.S.-Iran Fighting Fuels Supply Fears

Oil prices climbed on Tuesday as renewed fighting between the United States and Iran intensified concerns about potential supply disruptions in the Middle East and shipping risks through the Strait of Hormuz.

Brent crude futures gained $1.05, or 1.2%, to $91.54 per barrel at 0455 GMT, while U.S. West Texas Intermediate (WTI) crude rose $1.27, or 1.5%, to $87.03.

The gains extended Monday's rally, when Brent settled 2.7% higher and briefly reached its strongest level since August 25. WTI advanced 2.8% and touched its highest point since August 21.

Market concerns increased after U.S. President Donald Trump threatened additional strikes against Iran following Sunday's direct exchange of attacks between the two countries, their first in a month. The escalation has revived fears that Iranian retaliation could damage Gulf energy infrastructure or further restrict shipping through the Strait of Hormuz.

Tim Waterer, chief market analyst at KCM, said the renewed hostilities have brought the possibility of Iranian retaliation back into focus, adding uncertainty around regional energy facilities and shipping routes.

Traffic through the Strait of Hormuz remains severely constrained. Kpler data showed only five visible commodity vessels transited the waterway on Monday, compared with a 10-day average of roughly 14. None were liquid tankers.

Qatar and Oman have attempted to broker an agreement to reopen the strategic waterway, which handled around one-fifth of global oil supplies before the conflict began in late February. However, negotiations have made little progress.

Shipping risks were highlighted again Tuesday after the United Kingdom Maritime Trade Operations agency said a tanker reported being hit by three projectiles while leaving the Strait of Hormuz. No casualties or environmental damage were reported.

ANZ analysts estimated oil flows through Hormuz at around 6 million barrels per day, well below pre-conflict levels. They also warned that global supply buffers are shrinking as U.S. inventories approach low levels and seasonal Chinese demand increases.

U.S. Strategic Petroleum Reserve crude inventories fell by approximately 3.1 million barrels last week to 286.6 million barrels.

A Reuters survey conducted in August showed analysts expect oil prices to remain above $80 per barrel in 2026 as shipping disruptions persist.