Oil Prices Surge Above $90 Amid Ongoing Middle East Conflict and Strait of Hormuz Closure
Oil prices rose on Tuesday amid escalating tensions between the US and Iran, raising concerns over potential supply disruptions in the Middle East. Brent crude increased by 55 cents, or 0.61%, reaching $91.04 per barrel, while WTI crude climbed 79 cents, or 0.92%, to $86.55 per barrel as of 7:30 am IST. This uptick follows a significant rise in the previous session, where Brent closed 2.7% higher and WTI settled 2.8% up.
The renewed tensions stem from a recent exchange of attacks between the US and Iran, with President Donald Trump threatening further military action. This escalation comes after a period of economic standoff between the two nations. The Strait of Hormuz remains a critical focus for oil markets, as it previously accounted for about 20% of global oil supplies before the conflict intensified. Recent shipping data indicates that only five vessels were observed transiting the strait over the weekend.
Mediation efforts by Qatar and Oman to reopen the Strait of Hormuz have not yet succeeded. The UK Maritime Trade Operations agency reported that a tanker was struck by three projectiles while leaving the strait, although there were no casualties or environmental damage.
In addition to Middle Eastern tensions, developments in Venezuela are also drawing attention as the US seeks to replenish its oil reserves. Trump announced a deal with Venezuela to manage its oil reserves, which he stated would aid in replenishing the US Strategic Petroleum Reserve, currently at a 44-year low. Energy companies, including Indian oil giant ONGC, Chevron, and Italy’s Eni, are nearing final agreements on energy projects in Venezuela after extensive negotiations.
The Strategic Petroleum Reserve saw a further decline last week, with crude inventories dropping by approximately 3.1 million barrels to 286.6 million barrels. Analysts polled by Reuters expect oil prices to remain above $80 per barrel through 2026 amid ongoing shipping disruptions.
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