Global crude oil benchmarks continued to climb sharply on Tuesday, surging for a third straight session as the conflict between the United States, Israel and Iran expanded, heightening fears of major supply disruptions in the world’s energy markets.
Key international benchmarks surged significantly:
• Brent crude futures jumped about 7.8 per cent to US$83.79 a barrel by mid-day London trade, earlier touching levels not seen since July 2024 at around US$85.12.
• U.S. West Texas Intermediate (WTI) crude gained 7.5 per cent to US$76.54, also marking its highest point in months.
The sharp rally reflected growing concern over the widening Middle East conflict triggered by joint U.S.–Israeli military strikes on Iran and subsequent retaliatory attacks by Tehran. The escalation has disrupted critical fuel shipments and raised the spectre of longer-term impacts on global energy supply.
A major source of market anxiety has been activity around the Strait of Hormuz, a narrow waterway through which roughly one-fifth of the world’s crude oil and liquefied natural gas (LNG) typically flows. Reports that Iranian forces might target oil tankers and close the strait have prompted ship operators to avoid the route altogether, with many insurers cancelling war-risk coverage for vessels — further choking off shipments.
Analysts warn that while the immediate risk comes from disrupted transit through the Hormuz corridor, a broader threat could emerge if Iran or its allies begin damaging energy infrastructure across the Gulf region. Such actions could prolong outages at key facilities and drive prices even higher.
Several major Gulf energy producers have already seen production interruptions:
• Qatar has halted LNG production,
• Some Israeli gas fields have temporarily shut down,
• Saudi Arabia closed its largest refinery, and
• Oil output in Iraqi Kurdistan has virtually ceased.
These developments have also rippled into related markets, with European and Asian LNG, Dutch and British gas contracts, and refined oil products all registering notable price gains.
Market forecasters remain cautious. Investment house Bernstein raised its 2026 Brent crude price assumption from US$80 to US$80 a barrel — but also warned that in an extreme scenario of prolonged conflict, prices could climb significantly higher, potentially reaching US$120–US$150 a barrel.
Meanwhile, futures for diesel and gasoline also climbed:
• U.S. ultra-low-sulfur diesel rose more than 11%, hitting a two-year high, and
• U.S. gasoline futures gained around 5%, reflecting tighter supply expectations.
Beyond oil, rising energy prices are beginning to reverberate through other markets and economies worldwide. Analysts warn that sustained elevated fuel costs could add inflationary pressures to global inflation rates, squeeze household budgets, and weigh on growth if the conflict continues to disrupt supplies.
As traders and governments alike digest the latest price data, much of the focus remains on how long the conflict will last and whether key shipping routes like the Strait of Hormuz can remain open and secure. For now, the oil market appears to be pricing in heightened geopolitical risk that could persist for weeks or months — rather than days.
