Oil prices surge on Tuesday as tensions around the Strait of Hormuz escalated sharply. Meanwhile, traders responded to U.S. threats targeting Iranian infrastructure. As a result, investors closely tracked regional developments affecting global supply.
Brent crude futures climbed $1.74, or 1.6%, reaching $111.51 per barrel by 05:30 GMT. Similarly, U.S. West Texas Intermediate rose $3.45, or 3.1%, to $115.86 per barrel. These gains reflect heightened geopolitical risks.
President Trump issued a stern ultimatum, threatening attacks on Iranian bridges and power plants if the strait remains closed. About one-fifth of global oil normally passes through this strategic waterway. However, Tehran rejected U.S. ceasefire proposals, demanding a permanent end to hostilities.
Analysts warned that battlefield risks are now real, not theoretical. Priyanka Sachdeva noted that even if fighting ends, damaged energy infrastructure could disrupt crude supplies for months. Consequently, traders fear delayed shipments and long-term supply shortages.
Meanwhile, Gulf exports have already declined because the strait’s closures restrict flows. Iranian forces effectively blocked the route after U.S. and Israeli attacks began on February 28. Tim Waterer said market participants are now “clock-watching,” treating the deadline almost as seriously as fundamentals.
The U.N. Security Council plans to vote on protecting commercial shipping in the strait. However, China opposed authorizing force, limiting enforcement measures. Ongoing regional attacks added to tension. Explosions occurred in Damascus from intercepted Iranian missiles, while Saudi Arabia destroyed seven ballistic missiles near energy facilities.
The conflict continues to squeeze global crude supply. Spot premiums for U.S. WTI surged as Asian and European refiners scrambled for alternative sources. In addition, Saudi Aramco raised its Arab Light crude price to Asia, setting a record $19.50 per barrel premium above the Oman/Dubai average.
Adding to supply worries, Russia reported damage at the Caspian Pipeline terminal from Ukrainian drone attacks. The terminal handles about 1.5% of global crude. Meanwhile, OPEC+ agreed to raise output quotas by 206,000 barrels per day in May, but the increase remains largely symbolic due to the strait closure.
Overall, oil prices surge as geopolitical risk, supply disruptions, and infrastructure damage drive market volatility. Traders continue monitoring events closely to assess potential shortages and price movements.
