Oil breached $94 as US strikes in Iran and Hormuz tanker attacks escalate supply crisis

Global crude oil futures surged roughly 5% on Tuesday, extending a sharp multi-session rally to five-week highs as direct US strikes on Iranian targets and tanker attacks in the Strait of Hormuz intensified structural supply disruption risks across core Middle Eastern transit corridors.

International benchmark Brent crude rose $4.16, or 4.60%, to settle at $94.65 a barrel, marking its highest settlement since 24 July.

US West Texas Intermediate (WTI) climbed $4.46, or 5.20%, to close at $90.22 a barrel—its strongest finish since 23 July.

Upstream bullish momentum accelerated after US forces initiated air strikes against Islamic Revolutionary Guard Corps (IRGC) installations in Iran, following IRGC aggression against regional commercial shipping. Geopolitical risk premiums escalated after two oil tankers were struck exiting the Strait of Hormuz, effectively choking marine transit through the vital energy conduit as Tehran vowed to halt Persian Gulf exports in defiance of impending US sanctions and retaliatory warnings. The direct military exchange quashed expectations of diplomatic de-escalation, compounding vessel avoidance and sharply inflating marine war-risk insurance premiums.

The crude rally was further amplified by severe global product market dislocations. Extensive refinery outages across Russia and the Middle East drove US diesel futures to a 52-month high, pushing the diesel crack spread to an unprecedented $107 a barrel. Meanwhile, baseline upstream support was underpinned by anticipated domestic inventory tightness in the US, where industry estimates pointed to an 0.8-million-barrel crude drawdown for the week ended 28 August.

Written by: Aiman Haikal