Oil Prices Climb on Supply Concerns Amid Escalating Mideast Tensions

Alanbatnews -

Oil prices rose for a third consecutive session on Tuesday, fueled by growing concerns over potential supply disruptions in the Middle East as the conflict involving the U.S., Israel, and Iran intensifies.

Brent crude futures climbed to $78.83 a barrel, marking a $1.10, or 1.4%, increase. During the previous session, the contract had surged to $82.37, its highest level since January, before paring gains to settle up 6.7%.

U.S. West Texas Intermediate (WTI) crude futures also saw gains, rising 74 cents, or 1%, to $71.97 a barrel. Similarly, the prior day saw U.S. crude initially reaching its highest point since June before retreating to close up 6.3%.

The escalating tensions follow reports of expanded U.S. and Israeli air operations against Iranian targets. These actions have been met with retaliatory strikes by Iran, allegedly targeting energy infrastructure in Gulf states and oil tankers in the Strait of Hormuz.

The Strait of Hormuz is a critical chokepoint for global oil supplies, typically seeing the transit of tankers carrying approximately one-fifth of the world's oil demand. It also serves as a key route for shipments of diesel, gasoline, and other fuels to major Asian markets, including China and India, as well as roughly 20% of the world's liquefied natural gas (LNG).

Amid the rising tensions, some tankers and container ships are reportedly avoiding the waterway after insurance companies withdrew war risk coverage for vessels operating in the area.

Concerns regarding safe passage through the Strait of Hormuz have heightened following reports in Iranian media citing a senior Revolutionary Guard official stating that the Strait is closed and that Iran would fire upon any ship attempting to pass.

Analysts anticipate that oil prices will remain elevated in the coming days as markets focus on the potential impact of the escalating conflict in the Middle East on global supply chains.