Global oil prices rose for a third straight session on Tuesday as the widening US-Israeli conflict with Iran increased concerns over supply disruptions from the Middle East, one of the world’s key oil-producing regions.
Brent crude futures were trading at $79.44 a barrel at 0400 GMT, up $1.70 or 2.2%. On Monday, Brent surged to as high as $82.37, its highest level since January 2025, before easing and settling 6.7% higher.
US West Texas Intermediate crude rose $1.17, or 1.6%, to $72.40 a barrel. In the previous session, WTI climbed to its highest since June 2025 before pulling back, though it still ended 6.3% higher.
SUPPLY FEARS FROM STRAIT OF HORMUZ
The main concern in the market remains the Strait of Hormuz, a narrow waterway through which about 20% of the world’s oil and gas supply passes.
Tony Sycamore, market analyst at IG, told Reuters, “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 and Israel widened their air operations against Iran on Monday, with Israel attacking Lebanon and Iran responding with strikes against energy infrastructure in Gulf countries and against tankers in the Strait of Hormuz.
Shipping through the waterway has become more risky. Tankers and container ships are avoiding the route after insurers cancelled coverage for vessels operating in the area. Global oil and gas shipping rates have also risen sharply.
Iranian media reported that a senior Iranian Revolutionary Guards official said the Strait of Hormuz is closed and warned that Iran would fire on any ship attempting to pass.
ENERGY INFRASTRUCTURE AT RISK
Analysts say the risk is not limited to shipping alone.
ING analysts said in a note, “The market continues to digest the risk of escalation in the Middle East.” They 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.”
Refined fuel markets are also reacting to the developments. The Middle East is a key supplier of fuels, and its processing facilities are under threat. On Monday, Saudi Arabia shut its biggest domestic oil refinery after a drone strike.
US ultra-low-sulfur diesel futures rose 4.2% to $3.0207 per gallon after reaching a two-year high on Monday. Gasoline futures gained 1.7% to $2.4113 per gallon after rising 3.7% in the previous session.
European gasoil futures increased 4.3% to $925 a metric ton after jumping 18% on Monday.
PRICE OUTLOOK
Israeli Prime Minister Benjamin Netanyahu said on Monday that the war against Iran may take “some time” but it will not take years. Markets are now preparing for oil prices to remain elevated as long as tensions continue.
Bernstein has raised its 2026 Brent oil price assumption from $65 to $80 a barrel. In an extreme case of prolonged conflict, it sees prices rising to between $120 and $150 a barrel.
Apurva Sheth, Head of Market Perspectives and Research at SAMCO Securities, said crude prices have largely moved as anticipated after breaking above $66.
He said, “The breakout above $66 unfolded swiftly, with prices surging toward $70 and beyond after the US-Israel strike on Iran injected a sharp geopolitical risk premium into energy markets.”
Sheth added, “The spike now brings crude closer to the previous major swing high near $77.65 a level that capped prices in the prior cycle. That zone is likely to act as a strong medium term resistance.”
He cautioned traders against chasing prices at higher levels. “Geopolitical events often create emotional price extensions. Once the news is fully priced in, volatility cools and risk premiums compress. In trading parlance buy on rumour, sell on news,” he said.
Sheth further noted, “With crude already reacting sharply to the conflict narrative, the probability of consolidation or cooling off has increased. Momentum traders should avoid chasing strength here.”
In his earlier note dated February 19, he had said, “A decisive breakout above 66 can trigger the next leg higher to levels of $72-73. A breakout will potentially confirm that the energy phase of the commodity supercycle is underway.”
For now, oil markets remain focused on developments in the Middle East. As long as risks to shipping routes and energy infrastructure remain, prices are likely to stay volatile and elevated.
