Oil Prices Spike as US-Iran Tensions Escalate
Oil prices surged by nearly 2% on Tuesday as tensions between the US and Iran escalated, sparking concerns about supply disruptions from key crude-producing regions. The Brent crude futures price rose $1.72, or 1.9%, to $92.21 a barrel, while US West Texas Intermediate crude increased by $2.12, or 2.47%, to $87.88.
The renewed conflict between the two nations has revived fears of supply disruptions from the Middle East, which accounts for about a fifth of global oil supplies. Efforts by mediators, including Qatar and Oman, to broker a deal to reopen the Strait of Hormuz have so far been unsuccessful.
PVM analyst John Evans noted that the conflict will likely continue, saying 'The tit-for-tat missile exchanges between the US and Iran bring validation to those who believe this conflict will run and run.'
Saxo Bank analyst Ole Hansen added that a lack of follow-through buying suggests the market is betting on supply disruptions being limited.