Oil prices surged on the third day on Tuesday due to the growing US-Israeli confrontation with Iran, and the threats to shipping via the Strait of Hormuz increased concerns over disruptions of supply by the major Middle East producing region.
Brent crude futures were at $79.44 a barrel, up $1.70, or 2.2 percent, by 07:00 am Saudi time. The contract rose on Monday as high as $82.37, its best outlook since January 2025, but it scaled back the gains to close 6.7 percent higher.
US West Texas Intermediate crude soared $1.17, or 1.6 percent, to $72.40 a barrel. The contract initially rose to its highest since June 2025 before dropping back to settle up 6.3 percent in the previous session.
Tony Sycamore, IG market analyst, said in a note, “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.”
The US-Israeli air war against Iran escalated on Monday with Israel attacking Lebanon and Iran responding with strikes against energy infrastructure in Gulf countries, including tankers in the Strait of Hormuz.
Container ships and tankers are also avoiding the waterway as insurers have refrained from their coverage for vessels, while global oil and gas shipping rates have increased.
The risk of passing through the waterway escalated after Iranian media reported on Monday that an Iranian senior Revolutionary Guards official declared that the Strait of Hormuz is closed and Iran will fire at any vessel that attempts to pass through.
Approximately 20 percent of global oil and gas flows through the Strait of Hormuz. ING analysts in a Tuesday note stated, “The market continues to digest the risk of escalation in the Middle East.”
He added, “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.”
Israeli Prime Minister Benjamin Netanyahu said on Monday that the US and Israel’s war against Iran may take “some time,” but it will not take years.
However, analysts predict that oil prices will be high in the next few days as the markets concentrate on the influence of the increasing Middle East conflict.
Monday, Bernstein increased its 2026 Brent oil price estimate by $65 to $80 a barrel. It believes that prices could hit $120-150 in a worst-case scenario of extended conflict.
Refined product futures are also on the rise since the Middle East is one of the major suppliers of fuels, and its processing plants are threatened. Saudi Arabia closed its largest domestic oil refinery on Monday following a drone strike.
US ultra-low-sulfur diesel futures soared 4.2 percent at $3.0207 per gallon after reaching a two-year high on Monday, while gasoline futures were up 1.7 percent at $2.4113 per gallon after climbing 3.7 percent in the previous session.
Thus, the European gasoil futures rose 4.3 percent to $925 a metric tonne, having surged 18 percent on Monday.
