Oil prices have surged to their highest level in a month as renewed hostilities between the United States and Iran continued for a third consecutive day, dampening hopes for a return to normality in the Strait of Hormuz. This volatile situation has sent shockwaves through global markets, with Brent crude rising 2 percent on Tuesday and extending a 9.6 percent gain from the previous day. The primary international benchmark, Brent, now stands at $84.91 a barrel for September delivery, the highest since June 15. This dramatic increase comes after a 17 percent surge from its price before the US-Iran war began in late February. The US Central Command announced a third day of strikes on Iran, targeting Tehran’s ability to attack “innocent civilians and commercial shipping” in the Strait of Hormuz. Iran’s Islamic Revolutionary Guard Corps responded by attacking two oil supertankers in the strait and launching missile and drone strikes against US military assets in Kuwait and Bahrain. Adding to the market volatility, US President Donald Trump threatened to reimpose a blockade of Iranian ports and charge transit fees, claiming to be the “guardian” of the critical waterway. This has led to a significant drop in traffic through the Strait of Hormuz, with only 57 transits recorded from Friday through Sunday, a 50 percent decrease from the previous week. Before the US and Israel launched their initial strikes on Iran in late February, approximately 130 vessels transited the strait daily. The oil market has shown resilience, but the depletion of the strategic petroleum reserve buffer leaves it vulnerable to supply shocks. The Trump administration has attempted to reassure markets, but the situation remains tense. Bart Melek, global head of commodity strategy at TD Securities, predicts a substantial rise in oil prices, possibly reaching $100, if physical shortages become a reality. This crisis highlights the delicate balance of global oil supply and the potential impact of geopolitical tensions on energy markets.
