Middle East Tensions Fuel Record Oil Prices as Hormuz Disruptions Bite

Oil prices are surging due to ongoing tensions in the Middle East. The recent escalation of hostilities between the US, Israel, and Iran has raised concerns over oil supplies through the Strait of Hormuz. As a result, Brent crude is on track for its strongest weekly gain since July, with a price increase of more than 7%. This comes as European gas prices continue to rise, hitting their fourth consecutive weekly high.

The US retail diesel price has reached an all-time high, surpassing the previous record set in 2022. The average price of diesel climbed to $5.85 per gallon, adding pressure to industries such as trucking and construction that rely heavily on this fuel source. Russia's involvement in disrupting Russian fuel supplies is also contributing to the price hike.

Despite the risks around Hormuz, Abu Dhabi National Oil Co. (ADNOC) continues to load LNG cargoes onto tankers. Some suppliers have been using ship-to-ship transfers outside of the strait to move their cargo without relying on normal passage through Hormuz.