Reuters – Oil prices rose around 3% on Tuesday, clawing back some of the previous session’s losses on renewed supply fears, with the Strait of Hormuz largely shut and U.S. allies rejecting calls to deploy warships to escort tankers through the key chokepoint.
Brent futures jumped $3.07, or 3.1%, to $103.28 a barrel by 0734 GMT, while U.S. West Texas Intermediate crude gained $3.35, or 3.6%, to $96.85.
In the previous session, Brent futures settled 2.8% lower while U.S. West Texas Intermediate (WTI) crude slid 5.3% after some vessels sailed through the critical waterway.
The Strait of Hormuz – a vital gateway for about 20% of the world’s oil and liquefied natural gas trade – has been largely disrupted by the U.S.-Israeli war on Iran, now in its third week, raising concerns about supply shortages, higher energy costs and rising inflation.
“The risks remain stark: It only takes one Iranian militia to fire a missile or plant a mine on a passing tanker to reignite the entire situation,” IG market analyst Tony Sycamore said in a note.
Several U.S. allies rebuffed Donald Trump’s call on Monday to send warships to escort shipping through the strait, drawing criticism from the U.S. president, who accused Western partners of ingratitude after decades of support.
“For now, oil markets are fixated on the duration of the conflict, halted supplies at Hormuz, and eventually the damage this chaos will leave on oil infrastructure in the Gulf,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.
Meanwhile, traders said prices were further supported after a fire broke out in the Fujairah Oil Industry Zone after a drone attack during morning trade in Asia, though no injuries were reported. Middle East crude benchmarks have soared to all-time highs, becoming the most expensive oil in the world, with traders blaming the price spike on reduced supply available for delivery.
The effective closure of the strait has forced the United Arab Emirates, the Organization of the Petroleum Exporting Countries’ third-largest producer, to shut in production, reducing its output by more than half, two sources told Reuters.
Oil prices still have the potential to be higher by the end of March, with WTI’s medium-term resistance levels at $124 a barrel based on technical analysis, said OANDA senior market analyst Kelvin Wong.
To curb rising energy costs, the head of the International Energy Agency suggested member countries could release more oil, in addition to the 400 million barrels they have already agreed to draw from strategic reserves.
Israel said it has detailed plans for at least three more weeks of war as its military struck sites across Iran overnight.
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