Summary
- The US directly struck Iran, sending international oil prices sharply higher and pushing November Brent crude above $90 a barrel.
- Renewed conflict in the Middle East and fresh fighting in the Strait of Hormuz fed into prices through oil supply uncertainty and concerns over supply disruptions.
- About 6 million to 8 million barrels of crude a day are still passing through the Strait of Hormuz with shipping operating on a limited basis, and Brent futures prices moved in a range of about $17 over the past month.
Oil surged after the US directly struck Iran for the first time in about a month, reigniting military tensions around the Strait of Hormuz.
Bloomberg reported on Aug. 30 that November Brent crude climbed above $90 a barrel, while West Texas Intermediate traded around $86. The resumption of military confrontation in the Strait of Hormuz added to supply concerns that have persisted for months amid the Middle East conflict.
The latest rally was triggered by a US attack a day earlier on a rocket-launch site on Iran's Larak Island. Tim Hawkins, a spokesperson for US Central Command, said the site had been preparing to lay mines in the Strait of Hormuz. The strike also shattered a relative lull between Washington and Tehran that had lasted for several weeks.
Oil prices have been highly volatile this month as conditions in the Middle East shifted. Brent futures have traded in a range of about $17 a barrel over the past month. Prices were sensitive to alternating progress and setbacks in negotiations aimed at ending the US-Iran conflict, as well as Washington's pledge to intensify pressure to isolate Iran's economy.
Even so, crude shipments through the Strait of Hormuz have not been fully halted. Traders tracking cargo flows said about 6 million to 8 million barrels a day are still moving through the waterway even without a peace agreement between the US and Iran.
Iran's semi-official Mehr News Agency also said shipping is continuing on a limited basis through routes approved by Iran. Vessels using those routes are reportedly paying transit fees.
Brent futures trading volume may be lighter than usual because some parts of the UK are observing a public holiday that day.
Disclaimer: The market is risky, and investment needs to be cautious. This article does not constitute investment advice. Users should consider whether any opinions, views, or conclusions in this article are in line with their specific circumstances. Investment based on this is at their own risk.