Oil Prices Surpass $95 Amid Renewed US-Iran Conflict and Strait of Hormuz Disruptions

Oil prices continued their upward trajectory on Wednesday following a significant 4.6 per cent surge the previous day, driven by renewed fighting between the US and Iran that heightened concerns over potential supply disruptions through the Strait of Hormuz.

Brent crude, the international benchmark, rose 0.87 per cent to reach $95.47 a barrel at 8.09am UAE time. Meanwhile, West Texas Intermediate, the benchmark tracking US crude, traded 0.55 per cent higher at $90.72 a barrel. Both benchmarks had previously soared by more than $4 on Tuesday, marking their largest single-day gain in over a month.

US President Donald Trump stated on Tuesday that the US was executing large and powerful strikes on Iranian targets near the Strait of Hormuz. He noted these actions were in retaliation for an attempted placement of sea mines in the strait by Iranians, alongside eight missiles fired at a US military base in Jordan, all of which were successfully intercepted. He also warned of a potential larger attack, stating that further actions were prepared if necessary.

In response, Iran pledged to retaliate against the US attacks in the south of the country after confirming that several targets had been struck. Neighboring nations including Kuwait, Jordan, and Bahrain activated security alerts and intercepted incoming missiles on Wednesday morning.

Kyle Rodda, senior financial analyst at Capital.com, noted that the renewed hostilities in the Middle East have driven crude prices higher while negatively impacting Wall Street and pushing global bond yields to multi-year and multi-decade highs. He emphasized that the ratcheted-up strikes and potential reprisals heighten the risk of prolonged supply disruptions for Middle East energy exports.

Data from Kpler indicates that commercial crossings through the Strait of Hormuz—a vital trade route responsible for about a fifth of global oil exports prior to the conflict—have declined sharply. Initial data showed only about five non-container vessels crossed the waterway on Tuesday, compared to 10 on Monday, seven on Sunday, nine on Saturday, and significantly higher numbers the previous week.

Daniel Richards, senior economist at Emirates NBD, pointed out that any perceived threat to Gulf shipping lanes will continue to maintain an oil-risk premium in the market.