Oil benchmarks rallied on Tuesday, pushing prices to their highest levels in roughly a month as military and naval actions involving the United States and Iran in the Strait of Hormuz raised concerns about the reliability of regional energy shipments.
By 0051 GMT, Brent crude futures were trading at $84.98 per barrel, up $1.68 or about 2%. U.S. West Texas Intermediate (WTI) crude was at $79.79 a barrel, up $1.65 or roughly 2.1%. The move followed a sharp gain in the previous session when Brent jumped 9.6%, marking its largest one-day advance since May 2020.
Prices are now at levels not seen since the two countries signed a memorandum of understanding to end the war on June 17, reflecting an immediate response to developments in and around the Strait of Hormuz.
Incident reports and military activity
Authorities said two United Arab Emirates-flagged tankers were struck by two Iranian cruise missiles in the southern lane of the Strait of Hormuz, in waters under Omani territorial jurisdiction. The UAE Ministry of Defence reported that the strikes killed one Indian crew member and wounded eight others.
Separately, U.S. officials indicated a return to a naval posture designed to interdict Iranian shipping. U.S. President Donald Trump told reporters that the United States had reinstated its blockade of Iranian shipping and said he wanted the U.S. to be reimbursed for protecting countries that it was helping in the Strait of Hormuz.
The U.S. Central Command said it began a third consecutive night of strikes against Iran. Iran’s semi-official YJC news agency reported early on Tuesday that seven explosions were heard in the port city of Bandar Abbas and that two additional explosions occurred on Kish Island.
Wider regional escalation
Fighting beyond the Strait also weighed on markets. Yemen’s Houthi movement said it fired missiles at Saudi Arabia after accusing the kingdom of bombing an airport under Houthi control on Monday. That action prompted market observers to flag additional pathways for disruption.
"If the Houthis extend their attacks to Saudi’s crude products in the Red Sea, it could put (further) uncertainties on crude flows from the region," Simon Wong, a portfolio manager at Gabelli Funds, said in a note.
Market commentary and inventory signals
Market analysts pointed to the recent escalation and the U.S. blockade reinstatement as key drivers of the renewed risk premium in crude prices. "The latest escalation, including the U.S. reinstatement of the blockade and Iranian responses, has clearly injected fresh risk into the market," Tim Waterer, chief market analyst at KCM Trade, said. He added that while a full closure of shipping lanes had not occurred, competing objectives from both sides had made the supply picture highly uncertain.
On the supply-data front, a preliminary Reuters poll indicated U.S. crude oil stockpiles were expected to have fallen last week, while gasoline and distillate inventories likely increased. Those inventory dynamics, combined with the security-driven supply uncertainty, supported the price rise.
Implications
The combination of direct attacks on tankers, renewed naval enforcement around Iranian shipping, ongoing strikes and missile exchanges in the region has elevated short-term uncertainty for crude shipments transiting chokepoints. Market participants remain attentive to both on-the-ground developments and weekly inventory signals as indicators of near-term supply tightness or relief.