Iran-US Conflict Drives Oil Prices Up Amid Shipping Disruptions

Crude oil prices rose by around $1 on Tuesday as renewed fighting between the US and Iran in the Middle East raised concerns about supply disruptions from key crude-producing regions.

The resumption of hostilities, including President Donald Trump's threat to launch further strikes against Iran, increased fears of damage to energy infrastructure around the Gulf and added uncertainty for shipping through the Strait of Hormuz. As a result, Brent crude futures rose $1.05 or 1.2% to $91.54 per barrel, while US West Texas Intermediate crude increased by $1.27 or 1.5% to $87.03.

Analysts pointed out that despite satellite tracking firms suggesting oil flowing through the Hormuz Strait is around 6 million barrels per day, this is well below pre-conflict levels. The buffers the global oil market has been relying on are also becoming exhausted, with US inventories nearing minimum levels and China's ability to keep imports low being tested as seasonal demand picks up.

According to Tim Waterer, chief market analyst at KCM, the potential for Iranian retaliation brings back into the equation the risk of damage to energy infrastructure around the Gulf. This, in turn, raises the prospect of disruptions to shipping through the Strait of Hormuz and adds fresh uncertainty to global oil supplies.