Oil Prices Climb as Renewed U.S.-Iran Hostilities Stoke Supply Fears

Oil prices gained in early trading on Tuesday, with the global benchmark Brent crude rising above $91 a barrel, as renewed military conflict between the United States and Iran revived fears of significant supply disruptions in the Middle East.

By 0044 GMT, Brent crude futures for September delivery were up 0.6%, or 56 cents, to $91.05 a barrel, according to Reuters. U.S. West Texas Intermediate (WTI) crude climbed 1%, or 83 cents, to $86.59 a barrel. The gains build on a strong previous session where Brent and WTI settled up 2.7% and 2.8%, respectively.

Geopolitical Risk Returns to the Forefront

The primary driver for the price increase is the recent escalation in hostilities. Following the first direct exchange of attacks in a month over the weekend, U.S. President Donald Trump on Monday threatened further strikes against Iran, injecting a fresh geopolitical risk premium into the market.

This tension directly impacts the Strait of Hormuz, a critical chokepoint that handled approximately one-fifth of global oil supplies before Iran shut the waterway in late February. Efforts by mediators to reopen the strait have so far been unsuccessful. Underscoring the immediate danger, the United Kingdom Maritime Trade Operations (UKMTO) agency reported on Tuesday that a tanker was struck by three projectiles while sailing out of the strait, though no casualties were reported.

Market Impact and Analyst Commentary

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Analysts noted that the market is pricing in the potential for wider conflict and its impact on energy infrastructure and shipping. Data from Kpler showed that the number of visible commodity vessels transiting the Strait of Hormuz dropped to just five per day over the weekend.

"These bring the potential for Iranian retaliation back into the equation," said Tim Waterer, chief market analyst at KCM, in a note cited by Reuters. "That in turn raises the prospect of damage to energy infrastructure around the Gulf and adds fresh uncertainty for shipping through the Strait of Hormuz. Both of those risks are being reflected in the firmer tone in crude prices."

U.S. Reserves and Venezuelan Supply

Meanwhile, the U.S. is taking steps to secure alternative supplies amid the tensions and historically low domestic reserves. President Trump announced a deal with Venezuela to control the country's oil reserves, which he said would help replenish the U.S. Strategic Petroleum Reserve (SPR).

The SPR is near a 44-year low, having declined by another 3.1 million barrels last week to 286.6 million barrels. In a related development, sources told Reuters that several international energy firms, including Chevron, GE Vernova, and Eni, are on track to finalize agreements to develop energy projects in Venezuela.