Iran-US Tensions Spark Oil Price Surge as Strait of Hormuz Traffic Drops

The global oil market is on high alert as tensions between the US and Iran escalate, threatening supplies and driving prices higher. Brent crude futures settled up 1% at $95.63 a barrel, while US West Texas Intermediate crude futures rose 0.9% to settle at $91.01.

According to Mark Schaefer, a director at brokerage Liquidity Energy, the latest strikes mark a significant escalation of the conflict. The key concern for the oil market is whether the renewed fighting leads to another deterioration in physical flows through the region.

The Strait of Hormuz, a critical waterway that carries about a fifth of global oil and LNG, has seen a significant decrease in traffic. Preliminary Kpler shipping data shows only four commodity vessels transited the strait on Wednesday, below the 10-day average of around 13.

Nations worldwide are trying to limit price rises by finding other sources of supply and relying on their reserves, which have also dwindled. The OPEC+ producer group is expected to keep its oil output policy unchanged for October at a meeting on Sunday.