Crude extended gains to one-month highs as tanker attacks compound supply risks

Global crude benchmarks extended gains on Tuesday to settle at one-month highs, as the enforcement of a US naval blockade and retaliatory attacks on shipping infrastructure intensified global supply anxieties.

The international Brent contract climbed $1.43 (1.70%) to settle at $84.73 a barrel, while US WTI gained $1.20 (1.50%) to close at $79.34.

Both benchmarks secured their highest closes since mid-June, maintaining Brent in technically overbought territory for a second consecutive session.

Intraday volatility spiked following reports that Iranian cruise missiles struck two Emirati oil tankers in the Strait of Hormuz, resulting in casualties and swiftly neutralizing early-session relief from President Donald Trump’s decision to retract a proposed 20% maritime transit fee. The escalation follows a third consecutive night of US airstrikes aimed at countering Tehran's closure of the strait.

While gains were marginally capped by macroeconomic concerns regarding inflation-driven interest rate hikes and subsequent demand destruction, the prompt physical market remains heavily supported by geopolitical risk pricing.

Structural supply constraints were further exacerbated by overnight Ukrainian drone strikes targeting Russian refineries in the Bashkortostan and Krasnodar regions. The ongoing targeting of refining hubs has severely curtailed Moscow's diesel exports, driving US diesel futures up 21% in July and pushing global diesel crack spreads to record highs.

Coupled with an anticipated 2.7-million-barrel draw in weekly US crude inventories—marking the 13th decline in 14 weeks—the reduction in product yields is accelerating the transition of the hydrocarbon complex into a state of acute scarcity.

Written by: Aiman Haikal