Global oil markets surged for a third consecutive day on Tuesday, with Brent crude climbing more than $3 per barrel, as the intensifying conflict between the U.S.-Israel-Iran alliance raised alarms over potential interruptions to vital energy supplies from the Middle East.
The escalation, marked by airstrikes, threats to maritime routes, and attacks on infrastructure, has injected unprecedented volatility into commodity trading, pushing prices to levels not seen in over a year.
Brent crude futures, the international benchmark, rose 4.1% to $80.89 a barrel by 0745 GMT, building on Monday’s dramatic 6.7% gain that briefly propelled the contract to $82.37—its highest point since January 2025.
Similarly, U.S. West Texas Intermediate (WTI) crude advanced 3.6% to $73.78 a barrel, following a 6.3% increase in the prior session, where it touched a peak not recorded since June 2025. These gains reflect mounting investor anxiety over the stability of the region’s oil exports, which account for a significant portion of global supply.
The surge comes amid a broadening U.S.-Israeli air campaign against Iran, which expanded on Monday with Israeli strikes on targets in Lebanon and retaliatory Iranian actions. Iranian forces reportedly targeted energy facilities in Gulf nations and fired on tankers navigating the Strait of Hormuz, a narrow chokepoint through which approximately 20% of the world’s oil and natural gas transits.
Iranian state media amplified the tension by quoting a senior Revolutionary Guards official who declared the strait “effectively closed” and vowed to engage any vessels attempting passage.
Shipping disruptions have already materialized, with tankers and container vessels rerouting to avoid the waterway. Insurers have withdrawn coverage for transits through the area, causing global freight rates for oil and gas to skyrocket. “With no quick de-escalation in sight, the Strait of Hormuz effectively closed, and Iran showing a willingness to target energy infrastructure in the region, upside risks remain, and they grow the longer the conflict drags on,” noted Tony Sycamore, a market analyst at IG, in a client briefing.
Analysts at ING echoed these concerns, emphasizing that while the immediate threat centers on the Strait of Hormuz, a more severe risk lies in further Iranian strikes on regional energy assets. “The market continues to digest the risk of escalation in the Middle East,” they wrote in a Tuesday note. “While there are concerns about oil flows through the Strait of Hormuz, a greater risk to the market would be Iran targeting additional energy infrastructure in the region. This could lead to more prolonged outages.”
The conflict’s human and geopolitical toll is equally stark. Israeli Prime Minister Benjamin Netanyahu addressed the nation on Monday, framing the operations as a necessary response to Iranian aggression and stating that the war “may take some time” but would not extend into years.
However, the absence of a clear timeline has fueled speculation about a drawn-out engagement, potentially involving other regional powers and exacerbating global energy insecurity.
In a stark illustration of the infrastructure vulnerabilities, Saudi Arabia announced the temporary shutdown of its largest domestic oil refinery following a drone strike on Monday.
This incident, attributed to Iranian-backed forces, underscores the fragility of refining capacity in the Middle East, a key hub for processed fuels supplied to international markets.
The ripple effects extend beyond crude oil, with refined product futures also posting sharp increases. U.S. ultra-low-sulfur diesel futures jumped 8.3% to $3.1404 per gallon, after hitting a two-year high on Monday. Gasoline futures rose 3.8% to $2.4620 per gallon, extending a 3.7% gain from the previous day. In Europe, gasoil futures climbed 9.2% to $967.75 per metric ton, following an 18% surge on Monday.
These movements highlight the broader market’s apprehension, as the region not only produces raw crude but also refines and exports significant volumes of diesel, gasoline, and other products essential for transportation and industry worldwide.
Looking ahead, experts anticipate sustained price elevation as traders monitor the conflict’s trajectory. Bernstein analysts revised their 2026 Brent price forecast upward to $80 per barrel from $65, citing the ongoing hostilities. In a worst-case scenario of prolonged warfare, they project prices could spike to $120-$150 per barrel, a level that could strain global economies already grappling with inflation and energy transition challenges.
The current crisis revives memories of past Middle East disruptions, such as the 2019 attacks on Saudi facilities or the tanker seizures in the Strait during heightened U.S.-Iran tensions in the early 2020s. With OPEC+ production cuts still in place and global demand rebounding post-pandemic, any sustained outage could tip the balance toward a supply crunch, potentially driving up costs for consumers from Lagos to Los Angeles.
As diplomatic efforts falter and military actions intensify, the oil market’s fate hangs in the balance. Investors and policymakers alike will be watching closely for signs of de-escalation—or further deterioration—that could reshape the energy landscape for months to come.
WHAT YOU SHOULD KNOW
The Strait of Hormuz is effectively closed due to the escalating U.S.-Israel-Iran conflict, with Iran actively threatening and attacking vessels, and insurers canceling coverage. This chokepoint carries ~20% of the global oil and gas supply.
As a result, oil prices have surged sharply for three straight days—Brent hitting multi-year highs—and the risk of even larger, prolonged supply disruptions remains extremely elevated if the fighting continues or spreads to more regional energy infrastructure.
