Oil Extends Gains on Escalating US-Iran Attacks

Crude oil climbed above $91 per barrel on Wednesday, rising for a third consecutive session to its highest level in nearly six weeks as escalating hostilities between the US and Iran heightened concerns over further disruptions to energy flows from the Middle East. The US military launched fresh strikes against Iranian targets around the Strait of Hormuz, which President Donald Trump said were retaliation for Tehran’s attempts to lay mines in the waterway and for an earlier attack on a US military base. Trump also threatened a significantly larger response should Tehran retaliate. Iran said it had already responded by targeting US bases in the region and firing missiles toward Jordan. Meanwhile, US Treasury Secretary Scott Bessent said Iran’s bankruptcy is in the “acceleration phase,” while noting that 17 million barrels of crude passed through Hormuz on Monday, suggesting Tehran does not have control of the strategic waterway.

Crude oil rose more than 5% to near $90.5 a barrel on Tuesday, the highest since late July, after the US military launched new strikes against Iranian targets around the Strait of Hormuz following attacks on two oil tankers in the critical shipping route. US President Donald Trump also threatened a significantly larger response if Tehran retaliates. A senior Iranian military source said Tehran’s response would be “many times greater,” warning that bases across the region could quickly come under Iranian fire. The escalation threatens to prolong the conflict and further disrupt crude exports from the region. Meanwhile, a major Ukrainian drone attack on Russia’s Ust-Luga oil export terminal in the Baltic Sea sparked a fire, as Ukraine continues to target Russian refineries and energy infrastructure.

Crude oil futures rose to $89.5 per barrel on Tuesday, the highest in over one month, as more strikes in the Middle East prolonged the period of suspended exports from the region. The US launched a new wave of attacks against Iran after both countries exchanged strikes earlier in the week, heightening the conflict even though the US had signaled it would stick to only economic measures against Tehran. Tanker flows were set to drop sharply after reports that GCC nations enabled the export of barrels had allowed for some respite in crude oil and refined goods prices. A greater rebound to crude prices were prevented by major economies tapping on inventory to tame higher import turnover. The US SPR plunged to less than 290 million barrels, the lowest since 1982. On top of that, China significantly cut imports of crude oil and refinery runs in the country were cut by only 1.6 million barrels per day, indicating the cutback in crude consumption despite steady demand for refined product.