Crude Oil Pares Massive Gains

WTI crude oil futures eased toward $73.8 per barrel on Tuesday, paring massive gains as President Trump’s pledge to provide naval escorts for tankers in the Strait of Hormuz calmed immediate supply panic. While prices surged over 8% earlier in the session following drone strikes on Saudi Arabia’s Ras Tanura refinery and fires at the UAE hub in Fujairah, the military commitment to ensure the free flow of energy triggered a sharp reversal from daily peaks. Despite the retreat, oil remains at June highs as shipping activity through the Persian Gulf remains stalled and insurers withdraw war-risk coverage. This logistical paralysis limits the relief from the escort announcement, as roughly one-fifth of global consumption remains at risk. Furthermore, the death of Iran’s Supreme Leader and the subsequent 4-day escalation of strikes on Gulf energy hubs continue to fuel volatility. Markets now focus on the resilience of UAE air defenses against a barrage of Tehran-backed missiles.

Oil prices continued to rise on Tuesday, with WTI crude futures trading near $77 a barrel, the highest level since January 2025, extending an over 6% gain from the previous session. The escalating conflict with Iran is disrupting fuel shipments and raising concerns about further supply disruptions across Middle East oil and gas markets. Yesterday, Aramco halted operations at Saudi Arabia’s largest oil refinery in Ras Tanura on the Persian Gulf coast following a drone strike. Today, falling debris from an intercepted drone triggered a major fire at the UAE oil-trading hub of Fujairah, although normal operations have since resumed. Meanwhile, Iran has not officially closed the Strait of Hormuz, and Foreign Minister Abbas Araghchi stated the country has no intention of doing so. Nevertheless, shipping activity through the narrow strait has largely halted, and many insurers are planning to withdraw war-risk coverage for vessels entering the Persian Gulf.

WTI crude futures rose more than 8% toward $77 per barrel on Tuesday after rallying roughly 6% in the prior session, as traders tracked escalating hostilities in the Middle East and mounting risks of a full shutdown of the Strait of Hormuz. Trump said the US would do “whatever it takes” when asked how long the war with Iran could persist. A senior US official also reportedly indicated that the US was preparing a significant escalation in strikes on Iran within the next 24 hours, targeting its missile production, drones and naval assets. Meanwhile, a high-ranking Iranian official warned that ships attempting to transit the strait could be targeted. Tanker flows through the Strait of Hormuz, a vital chokepoint accounting for roughly one-fifth of global oil shipments, have effectively stalled amid heightened security risks. Saudi Aramco also temporarily suspended operations at its Ras Tanura refinery, the kingdom’s largest, while evaluating damage after a drone strike hit the facility.