US-Iran Tensions Spark Oil Price Surge Amid Escalating Conflict

Oil prices surged early Thursday as tensions between the US and Iran escalated, fueling concerns over energy supply disruptions in the Middle East. The price of oil rose by 1.1% to $97.14 a barrel, reaching its highest level since late-July.

The increase comes after the US and Iran engaged in some of their worst strikes on shipping since the conflict began in February. Iran said it struck 10 ships in and around the Strait of Hormuz on Wednesday, while the US claimed to have sunk five Iranian oil tankers.

Flows through the Strait of Hormuz remain at a fraction of pre-war levels, keeping markets on edge over persistent supply disruptions. The Houthi group, backed by Iran, attacked Saudi Arabian energy infrastructure this week, adding to concerns over supply disruptions spreading beyond just Hormuz.

ANZ analysts warn that 'the tit-for-tat attacks suggest oil flows from the Persian Gulf are likely to remain disrupted for the foreseeable future... The broadening of the conflict threatens to risk even deeper disruption to oil supplies.'