Oil prices soared about 8% to their highest since July 2024 on Tuesday, rising for a third session as the US-Israel war against Iran widened, disrupting oil and gas fuel shipments in the Middle East and heightening fears of a prolonged conflict.
Brent futures rose $6.07, or 7.8%, to $83.81 a barrel at 10:35 am EST (1535 GMT). US West Texas Intermediate increased $6, or 8.4%, to $77.23.
That keeps both crude benchmarks in technically overbought territory for a second day and on track to close at their highest levels since July 2024 for Brent and January 2025 for WTI.
In addition, the premium of Brent over WTI rose to $8 a barrel, its highest since November 2022. Analysts have said when this premium rises over $4, it supports crude exports from the US.
The US and Israeli air war against Iran has widened since Israel’s first attacks on Saturday. Israel has attacked Lebanon, and Iran has responded with strikes against energy infrastructure in Gulf countries and tankers in the Strait of Hormuz, through which a fifth of the world’s oil and liquefied natural gas typically passes.
Tankers and container ships are avoiding the waterway after insurers canceled coverage for vessels and global oil and gas shipping rates soared. Concerns increased after Iranian media reported on Monday that Iran will fire on any ship trying to pass through the Strait of Hormuz.
“While there are concerns about oil flows through the Strait of Hormuz, a greater risk to the market would be Iran targeting additional energy infrastructure in the region. This could lead to more prolonged outages,” ING analysts said in a note.
Andrew Lipow, president of consultancy Lipow Oil Associates, said Iran’s attacks on infrastructure could boost oil prices by $10 with Brent going to $90 and up.
US President Donald Trump said US and Israeli air attacks were projected to last four to five weeks but could go on longer.
United Arab Emirates authorities are dealing with a serious fire at Fujairah port, state media said on Tuesday. Iraq’s Kirkuk crude oil loadings at Turkey’s Ceyhan port stopped on Tuesday, a shipping source told Reuters.
Since the start of attacks across the region, oil and gas infrastructure in several countries has been shut down because of damage or as a precautionary measure. Qatar has stopped liquefied natural gas production, Israel has stopped production at some gas fields, Saudi Arabia shut its biggest refinery and output in Iraqi Kurdistan has virtually ceased.
Saudi oil giant Aramco is attempting to reroute some of its crude exports to the Red Sea to bypass the Strait of Hormuz where the risk of attacks has slowed shipping to a near halt, sources said on Tuesday.
In other energy markets, US diesel futures were up nearly 14% to their highest since September 2023. US gasoline futures were up nearly 5% at $2.48 a gallon to their highest since July 2024.
That increase in US gasoline and diesel prices caused crack spreads, which measure refining profit margins, to soar to their highest since 2023.
In global natural gas markets, benchmark Dutch contracts, British gas prices and European and Asian LNG prices all jumped.
Analysts expect oil prices to remain elevated over the coming days while markets focus on the impact of the escalating conflict.
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