Oil prices rise 3% on Tuesday

Oil prices rose around 3 per cent on Tuesday, recovering part of the previous session’s losses as supply concerns intensified following disruptions at the Strait of Hormuz amid the ongoing US-Israeli war on Iran.

Brent crude increased by 3.1 per cent to $103.28 a barrel, while US West Texas Intermediate gained 3.6 per cent to $96.85 in early trade, supported by fears of prolonged supply disruptions and escalating geopolitical tensions.

The rebound followed sharp losses on Monday, when Brent fell 2.8 per cent and WTI dropped 5.3 per cent after some vessels resumed transit through the waterway, which handles around 20 per cent of global oil and liquefied natural gas trade.

Market sentiment remained cautious as the effective closure of the strait disrupted flows and forced the Organization of the Petroleum Exporting Countries’s third-largest producer, the UAE, to cut output by more than half, tightening global supply.

Prices also drew support from a drone attack that triggered a fire at the Fujairah Oil Industry Zone, raising further concerns over the security of energy infrastructure in the Gulf, while Middle East crude benchmarks climbed to record highs due to limited availability.

Analysts indicated markets continue to focus on the duration of the conflict, potential damage to oil infrastructure, and the risk of further escalation, with expectations that prices could rise further in the near term.

Attribution: Reuters