Brent crude prices rose above $91.20 a barrel on Tuesday after a new military clash between the United States and Iran threatened energy shipments through the Strait of Hormuz.
The international benchmark traded up around 0.75 percent for its second consecutive session of gains. The rise followed a US strike on an island in the Strait of Hormuz and retaliatory attacks by Tehran against targets in the United Arab Emirates and Jordan.
The strikes marked the first substantial exchange of fire between American and Iranian forces in about a month. American crude, known as West Texas Intermediate, traded above $86.70 a barrel after rising 2.8 percent on Monday, its largest single-day gain in three weeks.
Brent crude serves as the primary price benchmark for global petroleum sales, while West Texas Intermediate is the main standard for American oil. The Strait of Hormuz is a critical shipping route located between Oman and Iran, connecting the Persian Gulf with the Gulf of Oman.
August volatility and military escalation
Crude oil closed August with marginal overall gains following a month of sharp price swings. Market movements during the month reacted to shifting expectations over whether the war might end, as well as commitments from Washington to step up economic pressure on Iran.
US President Donald Trump dismissed concerns that ongoing operations were draining American military resources, describing the conflict as a small war. Iran launched strikes against US air bases in Jordan, but local news outlets reported that incoming missiles were intercepted and destroyed before causing damage.
Speaking to Fox News on Monday, Trump said the United States would respond to any future attacks against American military forces. The warning raised concerns among market observers that both nations could enter a new cycle of military escalation.
Trader positioning and shipping hazards
Uncertainty over the next stage of the conflict has forced energy traders to alter their exposure. Bart Melek, head of commodity strategy at TD Securities, said traders reduced their net crude positions over the past week due to continued uncertainty surrounding the confrontation with Iran.
Melek added that oil prices could move even higher because there is no sign that normal shipping traffic through the Strait of Hormuz will be restored anytime soon. Several current and former officials from both the United States and Iran have estimated that the military conflict could last for months.
The ongoing fighting in the Middle East, combined with the war between Russia and Ukraine, has created heavier price pressure on refined oil products than on raw crude. Disruptions to refinery operations and cargo transport have limited global market supplies, placing diesel under heavy strain.
Tankers carrying crude oil continue to navigate the Strait of Hormuz, often turning off their location transponders to reduce tracking risks. Persian Gulf producers including Saudi Arabia, Kuwait, Iraq, and the United Arab Emirates continue to export a portion of their crude production through the passage.
Despite ongoing vessel traffic, navigation remains dangerous. A merchant tanker reported being struck by three unidentified projectiles while exiting the Strait of Hormuz near Oman, according to the UK Maritime Trade Operations, a maritime security monitoring body operated by the British Royal Navy. The agency noted that the attack underscored persistent threats to commercial shipping and reinforced the geopolitical risk premium built into global oil prices.
Refinery restoration at Ruwais
Supply conditions for refined fuels received a boost following the full restoration of the Ruwais refinery in the United Arab Emirates. The facility, operated by state-owned Abu Dhabi National Oil Co., suffered damage earlier in the war but has now returned to full operational output.
Ruwais ranks among the largest oil refineries in the world. People familiar with the matter said the complex has been operating at full capacity for about a month.
The return of the refinery to full capacity has increased exports of diesel and jet fuel. The additional supply has provided relief to energy markets at a time when global refined fuel inventories remain under significant pressure.
