Oil Hits One-Month High as US, Iran Step Up Attacks in Strait of Hormuz

Oil prices rose sharply on Tuesday to their highest in four weeks due to the escalating tensions between the US and Iran in the Strait of Hormuz.

The US reimposed its naval blockade of Iran, while both countries stepped up attacks in the strategic waterway. The move has heightened uncertainty about energy flows, causing oil prices to surge 1.8% to $84.80 per barrel at 0330 GMT.

Brent crude futures rose $1.50, while US West Texas Intermediate crude rose $1.70. The US military carried out a third consecutive night of strikes against Iran, as US President Donald Trump reinstated a blockade of Iranian shipping and proposed charging a 20% fee to guard the Strait of Hormuz.

Tim Waterer, chief market analyst at KCM Trade, said, "The latest escalation, including the US reinstatement of the blockade and Iranian responses, has clearly injected fresh risk into the market." He added, "While a full closure hasn't occurred, the competing objectives of both sides have made the supply picture highly uncertain."

Two United Arab Emirates tankers were hit by two Iranian cruise missiles in the southern lane of the Strait of Hormuz in Omani territorial waters, killing one Indian crew member and wounding eight others. Shipping data showed that the number of tankers transiting the Strait of Hormuz fell in the past day to the lowest level in two months.

Priyanka Sachdeva, an analyst at Phillip Nova, said, "The key variable to monitor is the physical movement of crude through the Strait of Hormuz. Any meaningful blockage of tanker traffic, prolonged reduction in vessel movements, or disruption to export flows would likely trigger another leg higher in oil prices."

Meanwhile, US crude oil stockpiles were expected to have fallen last week, while gasoline and distillate stocks likely rose, a preliminary Reuters poll showed on Monday.

The latest escalation between the US and Iran has significant implications for the global energy market. The Strait of Hormuz is a crucial waterway for oil exports, and any disruption to it could lead to a surge in oil prices. The situation is closely monitored by traders and investors, who are bracing for the worst.