Crude oil prices climbed sharply on Tuesday, extending a three-day rally as the US-Israeli conflict with Iran intensified, raising concerns about global fuel supplies and Middle Eastern energy security.
Brent crude futures rose $5.70, or 7%, to $83.44 a barrel, touching an intraday high of $85.12, their highest level since July 2024. US West Texas Intermediate (WTI) crude gained $5.03, or 7%, to $76.26, reaching a peak of $77.58, the highest since June. Since Friday’s close, Brent and WTI have surged about 17% and 16%, respectively, ahead of the weekend attacks.
The conflict began on Saturday when Israeli airstrikes targeted sites in Iran, followed by attacks on Lebanon. Iran retaliated with strikes on energy infrastructure across Gulf countries and targeted tankers in the Strait of Hormuz, a key shipping route for roughly 20% of the world’s oil and liquefied natural gas (LNG).
Shipping through the strait has largely stalled after insurers withdrew coverage, prompting tankers and container ships to reroute or delay journeys. Iranian media reported that a senior Revolutionary Guards official declared the strait closed and warned that any vessels attempting passage could be fired upon.
Analysts warned that the market faces risks not only from shipping disruptions but also from further strikes on regional energy infrastructure. ING analysts said that attacks on additional facilities could lead to prolonged outages, putting sustained upward pressure on global oil and gas prices.
Several countries have already seen energy output affected. Qatar halted LNG production, Israel stopped output at some gas fields, Saudi Arabia shut its largest refinery, and crude loadings from Iraq’s Kirkuk fields at Turkey’s Ceyhan port have ceased. The United Arab Emirates is tackling a major fire at Fujairah port, further intensifying supply concerns.
Gas markets also reacted sharply. Dutch and British gas benchmarks, along with European and Asian LNG prices, surged as regional supply uncertainty spiked. Refined products were affected too, with US ultra-low-sulfur diesel up 15% at $3.32 a gallon and gasoline futures rising 6% to $2.50 a gallon. European gasoil futures jumped 16% to $1,025 per metric ton after an 18% rise the previous day.
Bernstein raised its 2026 Brent oil price forecast to $80 a barrel from $65, noting that prices could reach $120-$150 per barrel in the event of prolonged conflict. Analysts expect oil markets to remain volatile in the coming days as traders monitor the evolving situation in the Middle East and assess the potential impact on global energy flows.
