Oil prices extended their sharp rally during Asian trading on Tuesday after gaining nearly 10% in the previous session.
The latest increase followed a renewed escalation between the United States and Iran. Washington announced plans to restore a maritime blockade on Iran and introduce new charges on cargo passing through the Strait of Hormuz.
At 02:58 ET, September Brent crude futures rose 2.7% to $85.57 per barrel. West Texas Intermediate crude climbed 3% to $80.46 per barrel.
Both major oil benchmarks reached one-month highs after recording their strongest single-day percentage gains in several months on Monday.
Trump Restores Iran Maritime Blockade
The latest oil price surge followed an announcement from US President Donald Trump that Washington would reinstate its naval blockade against Iran.
The decision came after renewed military exchanges between American and Iranian forces.
Trump also said the United States would impose a 20% charge on cargo travelling through the Strait of Hormuz. According to the president, the revenue would help cover regional security costs.
US Military Begins Blockade Enforcement
The US military said enforcement of the blockade would begin on Tuesday.
The measures are expected to target vessels connected to Iran. However, neutral commercial ships would reportedly still be allowed to pass through the strategic waterway.
The Strait of Hormuz is one of the world’s most important energy routes. Therefore, any restrictions affecting shipping could create significant risks for global crude supplies.
ING Warns of Major Market Impact
ING analysts said the return of the US blockade could have a much greater effect on oil markets than the earlier suspension of sanctions waivers covering Iranian crude.
However, the bank noted that Trump’s proposed transit charge lacked important details.
ING estimated that a 20% fee could add around $16 per barrel to the shipping costs of a very large crude carrier.
That would be significantly higher than the roughly $1-per-barrel toll previously proposed by Iran.
Attacks Increase Gulf Supply Risks
Military activity across the Gulf added to concerns about the safety of regional energy shipments.
Iran reportedly launched drone attacks against US assets in Kuwait and struck a vessel in the Strait of Hormuz with cruise missiles.
The United Arab Emirates also reported that two of its oil tankers had been attacked in Omani waters.
These developments increased fears that further retaliation could affect ships, ports and energy infrastructure throughout the region.
Strait of Hormuz Disruptions Threaten Global Oil Supply
Investors remained concerned that additional military escalation could interrupt oil flows from the Gulf.
Approximately one-fifth of global oil consumption passes through the Strait of Hormuz.
As a result, even limited disruptions could tighten global supplies, increase transport costs and push crude prices higher.
The latest conflict followed missile and drone exchanges between US and Iranian forces over the weekend.
Those attacks effectively ended a fragile understanding reached the previous month to reduce tensions around the vital shipping route.
Iran Warns of Further Retaliation
Tehran warned that continued US military action could trigger additional attacks across the region.
Iranian officials suggested that future retaliation could target energy infrastructure and other strategic assets.
Such action could increase the risk of prolonged disruptions to oil production and exports from the Middle East.
Oil Rally Raises Inflation Concerns
The rise in crude prices also affected broader financial markets.
Global equities came under pressure as investors assessed the potential economic impact of higher energy costs.
Rising oil prices can increase transportation, production and consumer expenses. This may keep inflation elevated and complicate the decisions facing major central banks.
Higher energy costs could also weaken global economic growth if businesses and households are forced to reduce spending elsewhere.
