Oil prices keep climbing as expanding conflict heightens supply risks

LONDON: Crude oil benchmarks rose more than $4 on Tuesday, soaring for a third session as the U.S.-Israeli conflict with Iran widens, disrupting fuel shipments and heightening fears of further Middle East oil and gas supply disruption.

Brent crude futures were up $4.94, or 6%, at $82.68 a barrel by 1028 GMT after touching their highest since July 2024 at $82.80.

U.S. West Texas Intermediate crude gained $4.68, or 7%, to $75.91 after hitting its highest since June at $76.02.

The U.S. and Israeli air war against Iran has widened since Israel’s first attacks on Saturday, with Israel attacking Lebanon and Iran responding with strikes against energy infrastructure in Gulf countries and tankers in the Strait of Hormuz, through which a fifth of the world’s oil and liquefied natural gas typically passes.

Tankers and container ships are avoiding the waterway after insurers cancelled coverage for vessels and global oil and gas shipping rates soared. Concerns increased after Iranian media reported on Monday that a senior Iranian Revolutionary Guards official said the Strait of Hormuz is closed and warned that Iran will fire on any ship trying to pass.

“While there are concerns about oil flows through the Strait of Hormuz, a greater risk to the market would be Iran targeting additional energy infrastructure in the region. This could lead to more prolonged outages,” ING analysts said in a note.

Stocks slide as Middle East conflict fans inflation fears

United Arab Emirates authorities are dealing with a serious fire at Fujairah port, state media said on Tuesday.

Since the start of attacks across the region, oil and gas infrastructure in several countries has been shut down because of damage or as a precautionary measure. Qatar has stopped liquefied natural gas production, Israel has stopped production at some gas fields, Saudi Arabia shut its biggest refinery and output in Iraqi Kurdistan has virtually ceased.

In gas markets, benchmark Dutch contracts, British gas prices and European and Asian LNG prices all jumped.

Analysts expect oil prices to remain elevated over the coming days while markets focus on the impact of the escalating conflict.

Bernstein on Monday raised its 2026 Brent oil price assumption to $80 a barrel from $65 but said that prices could reach $120-$150 in an extreme case of prolonged conflict.

Refined product futures are also gaining because Middle East processing facilities are at risk.

U.S. ultra-low-sulfur diesel futures were up more than 11% at $3.22 a gallon after reaching a two-year high on Monday. Gasoline futures were up 5% at $2.49 a gallon.

European gasoil futures gained 13% to $997.80 a metric ton after jumping 18% on Monday.