Oil prices have risen again amid escalating tensions between the U.S. and Iran
Global oil prices rose at the start of trading on September 2, continuing the sharp rise seen the previous day. The market reacted to growing concerns about disruptions to oil supplies following a new exchange of strikes between the U.S. and Iran.
The escalation of the conflict in the Middle East simultaneously dampened expectations of a rapid de-escalation and increased the risk premium in the oil market.
As of 3:45 GMT (6:45 Kyiv time), Brent crude futures rose 75 cents, or 0.8%, to $95.40 per barrel.
U.S. West Texas Intermediate (WTI) crude rose by 44 cents, or 0.5%, to $90.66 per barrel.
The previous day, on Tuesday, both major oil contracts rose by more than $4. This marked the largest one-day gain for Brent since July 24 and for WTI since July 23.
The latest price surge came after the U.S. announced a series of airstrikes on targets in Iran on the night of September 2. Tehran responded with strikes of its own, marking one of the most serious escalations between the two countries in recent weeks.
Iran’s Islamic Revolutionary Guard Corps stated that the U.S. attacks could further restrict shipping through the Strait of Hormuz.
This route is critical to the global energy market: before the conflict began, about one-fifth of the world’s oil supplies passed through the strait. Iran has now effectively restricted commercial shipping traffic.
“The events of recent days have once again brought to the forefront the risks to regional oil supplies… We have seen oil flowing through the Strait of Hormuz despite the stalemate between the U.S. and Iran, but rising tensions clearly threaten transit through the strait,” according to an ING research note to clients.
The IRGC also claimed to have launched ballistic missiles at a U.S. military base in Jordan. According to Iranian officials, a significant number of U.S. military personnel were killed in the attack.
At the same time, Iranian state media reported a massive drone attack on the U.S. base.
The Jordanian military stated that its air defense systems intercepted 10 of the 13 ballistic missiles that entered the country’s airspace.
However, two U.S. officials reported that, as of now, there is no information regarding casualties among U.S. military personnel as a result of the attacks.
Separately, Kuwait announced that it had deployed its forces to counter hostile drone activity.
The latest exchange of strikes followed an escalation of hostilities over the weekend—the first such incident since July.
Attacks on two tankers that left the Strait of Hormuz on September 1 added to the tension. This caused further disruptions to oil supplies and forced traders to seek alternative sources.
“The oil market is no longer just pricing in the risk of war; it is increasingly pricing in the cost of an unresolved war,” said Priyanka Sachdeva, head of market analysis at Phillip Nova.
According to her, high prices may persist until signs of a long-term resolution emerge.
“Until there is clear evidence that negotiations can lead to a long-term resolution and normal oil flows through the strait are restored, the risk premium in the oil market is likely to remain high,” she noted.
Data from the U.S.—the world’s largest oil producer—is having an additional impact on the market.
According to market sources, U.S. crude oil inventories fell by 2.6 million barrels during the week ending August 28.
Distillate inventories, which include diesel fuel and fuel oil, fell by an additional 265,000 barrels during this period.
Thus, the geopolitical escalation in the Middle East, risks to shipping through the Strait of Hormuz, and declining U.S. inventories are supporting high oil prices.
Reuters reports this.
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