Summary
Oil prices rose markedly in early Asian trading on Tuesday, lifting Brent back above the $100 per barrel mark amid ongoing concerns about supply disruption related to the U.S.-Israel war on Iran. The gains followed a sharp 5% decline in the previous session, as reports surfaced that some vessels had successfully transited the Strait of Hormuz, even while the waterway remained broadly obstructed and U.S. requests for allied naval assistance were mostly turned down.
Brent futures strengthened by 2.1% to reach $102.28 per barrel by 20:33 ET (00:33 GMT), while West Texas Intermediate futures rose 2.2% to $94.50 per barrel. The rebound came after a volatile session that saw crude give back earlier losses, reflecting traders weighing both the limited signs of resumed shipping and the persistent risk from regional hostilities.
Hostilities involving the U.S., Israel, and Iran showed little sign of relenting as the conflict moved into its third week. Iran issued threats to target U.S.-affiliated industries in the Middle East following last week’s strikes by the U.S. and Israel on Kharg Island, which is identified as a key export terminal for Iran’s oil.
Over the weekend, U.S. President Donald Trump appealed to at least seven countries, including China, to assist in reopening trade routes through the Strait of Hormuz. Those appeals drew limited traction; several U.S. allies said they had no immediate plans to deploy ships to the Middle East, effectively rebuffing Washington’s calls for a broader patrol presence.
The status of the Strait of Hormuz has been central to market concern because it handles roughly 20% of the world’s oil supply. Earlier in the month Iran had effectively shut down the strait. On Monday, reports indicated that some India- and Pakistan-flagged gas tankers were able to pass through. Iran has signaled it will permit vessels from certain countries to transit while reserving the right to attack ships linked to the U.S. and its allies.
Markets are also focused on the inflationary implications of the conflict. Energy-driven price pressure is a key worry because it could prompt more hawkish responses from major central banks. A number of leading monetary authorities, including the Federal Reserve, the European Central Bank, and the Bank of Japan, are scheduled to meet this week, adding to the market’s sensitivity to oil-price movements.
For now, trading reflects a balance between intermittent operational openings in the strait and sustained strategic risk. Oil’s recent volatility underscores the entwined nature of maritime security, energy flows, and monetary-policy considerations that are influencing both commodity markets and broader financial conditions.
Key points
- Brent rose 2.1% to $102.28/barrel and WTI rose 2.2% to $94.50/barrel by 20:33 ET (00:33 GMT), recovering from a prior 5% decline.
- Shipping through the Strait of Hormuz remains largely blocked although some India- and Pakistan-flagged gas tankers reportedly transited successfully.
- Inflationary pressure from higher energy prices could influence upcoming policy decisions by major central banks, including the Fed, ECB, and BOJ.
Risks and uncertainties
- Continued closure or repeated disruptions in the Strait of Hormuz could keep upward pressure on global oil prices - impacting the energy sector and transport-dependent industries.
- Reluctance among U.S. allies to send ships to the Middle East means that international policing of the shipping lane remains limited, which may prolong market volatility in shipping and commodities.
- Stronger energy-driven inflation risks prompting more hawkish central bank action, with potential knock-on effects for financial markets and borrowing costs.