Oil Prices Surge 8% to Highest Level Since 2024 as Middle East Conflict Escalates
Oil prices jumped about 8% on Tuesday, reaching their highest levels since July 2024. The rally marked a third consecutive session of gains as the widening U.S.-Israel conflict with Iran disrupted energy shipments in the Middle East and raised fears of a prolonged war.
Brent crude futures climbed $6.07, or 7.8%, to $83.81 per barrel. U.S. West Texas Intermediate (WTI) rose $6, or 8.4%, to $77.23 per barrel. Both benchmarks remained in technically overbought territory for a second straight day and were on track for their highest closes in months.
The price premium of Brent over WTI widened to $8 per barrel, its highest level since November 2022. Analysts note that when this spread exceeds $4, it typically supports higher U.S. crude exports.
Strait of Hormuz Disruptions Fuel Supply Concerns
The conflict has intensified since Israel’s initial strikes, with military actions expanding across the region. Iran has reportedly targeted energy infrastructure in Gulf countries and tankers passing through the Strait of Hormuz — a critical shipping route that handles around 20% of global oil and liquefied natural gas flows.
Shipping through the Strait of Hormuz has slowed sharply as insurers withdrew coverage for vessels. Tankers and container ships are increasingly avoiding the waterway. Iranian media also reported that Iran would target any ship attempting to transit the strait, further escalating concerns.
Analysts at ING warned that while risks to oil flows through the Strait of Hormuz are significant, an even greater threat would be additional Iranian strikes on regional energy infrastructure, potentially leading to extended production outages.
Andrew Lipow, president of Lipow Oil Associates, said that further infrastructure damage could push Brent crude toward $90 per barrel or higher.
Energy Infrastructure Hit Across the Region
U.S. President Donald Trump said air operations could last four to five weeks, with the possibility of an extended campaign.
Several countries in the region have already faced energy disruptions. Qatar halted liquefied natural gas production, Israel suspended output at some gas fields, Saudi Arabia shut down its largest refinery, and oil production in Iraqi Kurdistan has nearly stopped.
Meanwhile, Saudi Aramco is reportedly rerouting some crude exports to the Red Sea to bypass the Strait of Hormuz, where shipping activity has slowed dramatically.
Additional disruptions were reported at Fujairah port in the United Arab Emirates, while crude loadings from Iraq’s Kirkuk fields at Turkey’s Ceyhan port were also halted.
Gasoline and Diesel Prices Spike
The surge in crude oil prices spilled over into refined fuel markets. U.S. diesel futures jumped nearly 14%, reaching their highest level since September 2023. U.S. gasoline futures rose close to 5%, hitting their highest level since July 2024.
Refining margins, measured by crack spreads, surged to their strongest levels since 2023 as higher crude costs boosted profitability expectations for refiners.
In global natural gas markets, benchmark Dutch and British contracts, along with European and Asian LNG prices, also recorded sharp gains.
Market analysts expect oil prices to remain elevated in the near term as traders assess the potential duration and economic impact of the expanding Middle East conflict.
