Oil prices experienced an increase for a third consecutive day on Tuesday, driven by the escalating U.S.-Israeli conflict with Iran and the associated threats to shipping routes through the Strait of Hormuz, which have intensified concerns regarding potential supply disruptions from this critical Middle Eastern production area. Brent crude futures stood at $78.83 a barrel, reflecting an increase of $1.10, or 1.4%, as of 0107. On Monday, the contract experienced a notable increase, reaching a peak of $82.37, marking its highest level since January 2025, although it subsequently reduced those gains to close 6.7% higher.

U.S. West Texas Intermediate crude increased by 74 cents, or 1%, reaching $71.97 per barrel. In the previous session, the contract initially ascended to its peak since June 2025 before retracting, ultimately concluding with a gain of 6.3%.With no immediate resolution in view, the Strait of Hormuz remains effectively shut, and Iran appears prepared to strike energy infrastructure in the area. Consequently, the potential for upward price movements persists and intensifies the longer the conflict continues,” stated Tony Sycamore. The air conflict involving the U.S. and Israel against Iran escalated on Monday, as Israel launched attacks on Lebanon, prompting Iran to retaliate with strikes targeting energy infrastructure in Gulf nations and tankers in the Strait of Hormuz.

On an average day, vessels transporting crude oil, which accounts for approximately one-fifth of worldwide demand, navigate through the Strait of Hormuz, accompanied by tankers delivering diesel, gasoline, and other fuels to significant Asian markets such as China and India. The waterway serves as the channel for approximately 20% of global liquefied natural gas supply. Tankers and container ships are steering clear of the waterway, as insurers have withdrawn their coverage for vessels. Concerns regarding navigation through the waterway are escalating, following reports from Iranian media on Monday. A senior official from the Iranian Revolutionary Guards stated that the Strait of Hormuz is closed and warned that Iran will target any vessel attempting to transit. On Monday, the Revolutionary Guards reported that a fuel tanker, identified as the Honduran-flagged Athe Nova, was ablaze in the Strait following an attack by two drones, according to sources. Analysts anticipate that oil prices will stay high in the near term as markets concentrate on the repercussions of the intensifying conflict in the Middle East.

Bernstein on Monday elevated its 2026 Brent oil price forecast from $65 to $80 per barrel, while projecting that prices could escalate to $120-$150 in a scenario characterized by extended conflict. Refined product futures are experiencing an upward trend, driven by the Middle East’s significant role as a fuel supplier, coupled with the vulnerabilities facing their processing facilities. On Monday, Saudi Arabia closed its largest domestic oil refinery following a drone strike. U.S. ultra-low-sulfur diesel futures increased by 3.1% to $2.991, following a two-year high achieved on Monday. Meanwhile, gasoline futures rose by 1.1%, building on a 3.7% gain from the prior session. European gasoil futures increased by 2.7% to $909.50 per metric ton, following an 18% rise on Monday.