US-Iran Tensions Send Oil Prices Soaring
Oil prices surged to a five-week high due to fresh US-Iran tensions that reignited fears about supply disruptions through the Strait of Hormuz. The latest escalation came after the US carried out another round of strikes on Iran, prompting President Donald Trump to warn Tehran against retaliation.
However, Iran responded by attacking Jordan, Bahrain, and Kuwait, countries that host US forces, further escalating tensions in the region. As a result, market expectations shifted towards a prolonged military confrontation, reducing hopes for a negotiated settlement.
The Strait of Hormuz remains central to the supply outlook, with 17 million barrels of crude moving through the waterway on August 31, according to US Treasury Secretary Scott Bessent. Energy Secretary Chris Wright noted that exports were averaging around 8 million barrels a day, while another 4-5 million barrels were being transported through pipelines that bypass the strait.
US refiners are taking advantage of strong margins by ramping up production. According to data from the Energy Information Administration, US refinery runs rose to their highest level in seven years last week, with Midwest refinery utilisation reaching an unprecedented 103.5% of capacity.