Iran-US Tensions Drive Oil Prices Up as Strait of Hormuz Flows Remain Uncertain

Renewed hostilities between the US and Iran have pushed oil prices higher, sparking concerns about prolonged disruptions to energy flows through the Strait of Hormuz. Brent crude traded around $96 a barrel this week, up more than 7% from last week's close, while West Texas Intermediate was near $92.

The flare-up in tensions comes after a US bombing campaign earlier in the week was met with Iranian retaliation against American bases in the region. Iran's forces continued to target vessels transiting Hormuz and fired missiles at Jordan, Kuwait, and Bahrain.

Despite some differences of opinion about the scope of the conflict, Vice President JD Vance downplayed its significance, stating that major combat operations ended weeks ago. However, Representative Pat Harrigan of North Carolina, a member of the House Armed Services Committee, offered a more nuanced assessment, saying 'very clearly militarily, we are stalled.'

Oil markets are repricing their vulnerability to the ongoing security issue, according to Priyanka Sachdeva, head of market insights at Phillip Nova Pte Ltd. in Singapore.