Oil prices surged more than $4 a barrel on Tuesday to their highest levels in five weeks as renewed US-Iran fighting heightened fears of further disruption to Middle East supplies. Brent crude futures rose $4.16, or 4.6%, to settle at $94.65 a barrel, while US West Texas Intermediate (WTI) gained $4.46, or 5.2%, to $90.22. The settlements marked the strongest levels for Brent since July 24 and WTI since July 23.
The rally came after the United States launched a fresh wave of air strikes on Iranian targets, dashing hopes that last weekend's exchange of direct attacks would not lead to a sustained renewal of hostilities. Oil had already climbed following that initial exchange and reports that two tankers were hit while leaving the Strait of Hormuz, a critical conduit for global oil supplies that Iran has effectively closed to shipping. Tehran has vowed to prevent oil exports from the Gulf, while US President Donald Trump threatened to hit Iran "hard" in response to renewed Iranian attacks. US Treasury Secretary Scott Bessent also warned that Washington was preparing new sanctions against Tehran.
"Today at 12pm ET (1600 GMT), US forces began striking Islamic Revolutionary Guard Corps targets in Iran," US Central Command posted on X. "The strikes follow recent attempted attacks by the IRGC against commercial shipping in the Strait of Hormuz and against American service members deployed to the region." The fresh hostilities "raised concerns about prolonged disruptions to energy flows through the Strait of Hormuz," Saxo Bank analyst Ole Hansen said.
Disruptions at refineries around the world, especially in the Middle East and in Russia, have caused diesel prices to spike. In the US, diesel futures jumped to a 52-month high on Tuesday after soaring 51% over the past 10 weeks, boosting the crack spread - which measures refining profit margins - to a record high of around $107 a barrel, according to LSEG data. Meanwhile, Russian air attacks killed 12 people and injured many more in Kyiv and the surrounding region early on Tuesday, authorities said, marking the sixth straight day of intense strikes on the Ukrainian capital.