Oil prices hit a six-week high as escalating US-Iran tensions threaten to disrupt critical Middle East shipping lanes, with Brent crude settling at $97.31 a barrel on Monday after hitting $98.06, its highest point since July 24.
The surge came as Iran vowed to strike energy infrastructure across the Middle East in response to further US attacks on its assets. Iranian Parliament Speaker Mohammad Baqer Qalibaf said on Monday: “Strike our assets and you get struck,” marking the latest escalation in a conflict that has sharply reduced oil supply from the region since February 28, when the US and Israel first struck Iran.
The US and Iran traded strikes on oil tankers and warships over the weekend, with the US hitting three Iranian oil tankers on Saturday while Iran’s Islamic Revolutionary Guard Corps struck three tankers and three US-linked vessels in other areas. Maritime intelligence firm Marisks said this represents a major escalation, with “commercial tankers now being deliberately used as instruments of reciprocal economic pressure, substantially weakening the previous distinction between military confrontation and commercial shipping.”
The impact on global energy flows is immediate and severe. An average of 10 commodity ships transited the Strait of Hormuz per day over the past 10 days—the lowest since May, according to analytics firm Kpler. The Strait carries roughly a quarter of global oil flows during peacetime, making any disruption a critical concern for energy markets worldwide.
Supply concerns are deepening. In the United States, inventories of gasoline and distillate fuel are substantially below year-ago and five-year seasonal averages, according to PVM Energy analysts, who noted the situation has worsened in recent weeks. Rachel Ziemba, an adjunct senior fellow at the Center for a New American Security, told Al Jazeera: “This is a reflection of continued conflict and exchange of fire. The supply deficits globally are persisting, and there is little end to these shortages.”
The attack on Saudi Aramco’s Jizan refinery on Monday—the second strike on the facility in a month—added to market anxiety. Ziemba noted that “the fact that a Saudi refinery in Jizan was hit, possibly delaying its return to production, didn’t help” oil markets already bracing for extended disruptions.
Analysts see significant upside risk to prices. Goldman Sachs said oil could rally as high as $120 a barrel if attacks on shipping intensify, according to Bloomberg reporting on Monday. Priyanka Sachdeva, head of market insights at Phillip Nova, warned that “if tanker traffic begins to slow materially, the market could price in a much larger supply shock. And there are already signs that this is happening.”
The price pressure extends beyond crude to refined products. Gas prices hit record highs for Labor Day at $4.14 per gallon, and diesel prices reached all-time highs of $5.90 per gallon. Since the war began, the average American household has spent an additional $418.82 on fuel, according to Brown University’s Watson School of International and Public Affairs.
The broader market is responding to the supply shock. Stock market falls as oil surges on Middle East tensions, with equity investors pricing in both the direct cost of energy and the inflation risk it poses. Mortgage rates surge to 6.9% amid inflation and Middle East tensions, as financial markets anticipate sustained pressure on borrowing costs.
Brent rose around 8% last week and West Texas Intermediate gained nearly 10%, extending a rally that has pushed crude prices up 19% over the past month. The volatility underscores how fragile global energy markets remain as long as the Strait of Hormuz—through which roughly a fifth of the world’s oil supply travels during peacetime—remains contested.
Sources
- Reuters — Oil prices rise to six-week highs on worsening Middle East conflict; Iran vows to strike energy infrastructure; Brent crude settles at $97.31/barrel; Goldman Sachs forecasts $120/barrel risk; Strait of Hormuz traffic at lowest since May.
- Al Jazeera — Oil prices surge as US-Iran strikes intensify in Strait of Hormuz; expert commentary from Rachel Ziemba and Priyanka Sachdeva; gas and diesel price impacts on US consumers; Jizan refinery attack details.
- Marisks (maritime intelligence) — US and Iran traded strikes on oil tankers over weekend; commercial tankers used as instruments of economic pressure.
- Kpler (analytics firm) — Strait of Hormuz traffic data: 10 commodity ships per day average over past 10 days, lowest since May.
- PVM Energy — US gasoline and distillate fuel inventories substantially below year-ago and five-year seasonal averages.
