Oil Prices Surge as US-Iran Tensions Escalate Through Strait of Hormuz

Oil prices rose for a second day in a row due to renewed attacks between the US and Iran, which disrupted oil flows through key shipping routes. Brent futures increased by $1.06, or 1.17%, to $91.80 a barrel after touching a low of $89.02.

The Strait of Hormuz has been a focal point for oil markets since February 28, when the conflict began. The US and Saudi Arabia attacked Iran-backed paramilitary forces in Iraq on July 29, in retaliation for drone attacks on Saudi oil targets launched from Iraq.

Analysts said investor focus was on the volume of oil exiting key chokepoints and possibility of a diplomatic breakthrough. 'Until safe passage through the Strait of Hormuz is no longer a gamble, the risk premium in oil is not going anywhere - hope for diplomacy is welcome, but the market is pricing the reality of ongoing strikes,' said Tim Waterer, chief market analyst at KCM Trade.

The Caspian Pipeline Consortium suspended oil loadings following a drone attack on a tanker, and Yemen's Houthi group is considering imposing fees on commercial ships sailing through the southern Red Sea. 'For Brent to break convincingly above recent highs and sustain a move higher, we would need clearer evidence of prolonged physical disruption - either a sustained reduction in flows through Hormuz or confirmed damage to key energy infrastructure,' Waterer added.