Global oil prices extended their rally on Tuesday as escalating hostilities between the United States, Israel and Iran intensified concerns over supply disruptions from the Middle East.
Brent crude futures rose by more than $3 for a third consecutive session, climbing $3.15, or 4.1 per cent, to $80.89 per barrel by 0745 GMT. On Monday, Brent had surged to as high as $82.37 per barrel its highest level since January 2025 before settling 6.7 per cent higher.
U.S. West Texas Intermediate crude also recorded strong gains, rising $2.55, or 3.6 per cent, to $73.78 per barrel. In the previous session, the contract had touched its highest point since June 2025 before closing 6.3 per cent up.
Market analysts attributed the rally to fears that the widening conflict could severely disrupt oil flows through the Strait of Hormuz, a critical shipping route through which about 20 per cent of the world’s oil and gas supplies pass.
Tony Sycamore, market analyst at IG, warned that risks remain elevated. “With no quick de-escalation in sight, the Strait of Hormuz effectively closed and Iran showing a willingness to target energy infrastructure in the region, upside risks remain and they grow the longer the conflict drags on,” he said in a note.
The conflict intensified on Monday as Israeli forces struck targets in Lebanon, while Iran responded with attacks on energy infrastructure in Gulf states and on tankers navigating the Strait of Hormuz.
Shipping activity through the waterway has slowed significantly, with tankers and container vessels reportedly avoiding the route after insurers withdrew coverage. Global oil and gas freight rates have since surged. Iranian media quoted a senior Revolutionary Guards official as declaring the Strait closed and warning that any vessel attempting to pass would be fired upon.
Analysts at ING said the market continues to price in the risk of further escalation. “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,” they noted.
Israeli Prime Minister Benjamin Netanyahu said on Monday that the joint war effort against Iran may take “some time”, although he insisted it would not last years.
Investment firm Bernstein has revised its 2026 Brent price forecast upward to $80 per barrel from $65, warning that in a prolonged and severe conflict, prices could spike to between $120 and $150 per barrel.
Refined fuel markets have also reacted sharply. Saudi Arabia shut down its largest domestic oil refinery following a drone strike on Monday, heightening concerns over fuel supply.
In the United States, ultra-low-sulphur diesel futures jumped 8.3 per cent to $3.1404 per gallon after hitting a two-year high a day earlier. Gasoline futures rose 3.8 per cent to $2.4620 per gallon.
European gasoil futures climbed 9.2 per cent to $967.75 per metric tonne, building on an 18 per cent surge recorded in the previous session.
Analysts expect oil and refined product prices to remain elevated in the coming days as markets closely monitor developments in the Middle East.
