US-Iran war: Oil prices extended their gains for a fourth consecutive session on Thursday after fresh US strikes on Iranian military sites heightened concerns over a broader regional conflict and potential disruptions to oil supplies through the Strait of Hormuz.
Brent crude futures rose 33 cents, or 0.4%, to $85.28 per barrel, following a 12% surge over the previous three sessions. Meanwhile, US West Texas Intermediate (WTI) crude futures gained 42 cents, or 0.5%, to $80.02 per barrel.
Both benchmark crude contracts had advanced around 0.3% on Wednesday and were trading close to the one-month highs reached earlier in the week.
What’s driving crude oil prices today?
The United States carried out fresh airstrikes on Iran on Wednesday and said it intercepted an empty oil tanker headed toward a port in the OPEC member nation.
Crude oil prices climbed to their highest level in nearly a month as the escalating conflict renewed concerns over supply disruptions from the energy-rich Middle East, reversing part of the nearly 30% decline recorded in the second quarter. At the same time, frequent Ukrainian attacks on Russian fuel facilities and oil tankers have added to worries over global energy supplies.
US President Donald Trump vowed to step up military action against Iran until Tehran halts attacks on ships passing through the Strait and agrees to reopen the critical energy corridor. According to The Wall Street Journal, Trump is considering broadening military operations and has discussed the possibility of targeting Kharg Island, which houses Iran’s main oil export terminal.
However, Iran has shown little indication of retreating. The Islamic Revolutionary Guard Corps said on Wednesday that the Strait would remain closed until the US ends its military strikes and lifts the blockade on Iranian ports.
Iran’s recent attacks on oil tankers have also disrupted the rapidly growing “shuttle run” trade, in which crude is transferred from one vessel to another outside the Strait to bypass disruptions. The practice had become an important export route for countries such as the United Arab Emirates during the conflict, although any interruption to the system could prove temporary.
Despite the tensions, shipping activity through the Strait has continued. According to US Central Command spokesperson Captain Tim Hawkins, US-assisted vessel transits reached double digits on Tuesday night. Of the nearly 300 ships that navigated the waterway over the past week, almost half received assistance from US forces.
Crude oil price outlook
Global firm Goldman Sachs said Brent crude prices could climb above $110 per barrel in the fourth quarter if disruptions to Gulf exports persist. However, the investment bank expects prices to decline to the $60s by the end of the year if geopolitical tensions subside and oil production rebounds more quickly than anticipated.
Meanwhile, Aamir Makda, Commodity & Currency Analyst, Commodity Technical Research, Choice Broking, also believes that as tensions rise between the United States and Iran, global crude oil prices may exceed $100 per barrel, moving from a speculative concern to a likely scenario.
“Prices reflect psychological risk premiums, with the Strait of Hormuz’s vulnerability playing a critical role in this shift. A military confrontation affecting navigation could trigger speculative buying, pushing Brent crude prices above $100 and creating stagflation risks,” Makda said.
(With inputs from agencies)
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