Oil prices surged on Tuesday to their highest levels in nearly five months, as energy traders brace for a further escalation of the Israel-Iran conflict.
The increase in oil prices accelerated as U.S. President Donald Trump prepared to meet with national security officials in the White House Situation Room. Two officials told CNN that Trump is becoming increasingly open to using American military assets to strike Iranian nuclear facilities.
Market Impact and Supply Concerns
U.S. oil futures contracts rose by 4.3%, closing at $74.84, marking the highest closing price since January 22. Crude oil has climbed 23% so far this month, a shift that is already pushing up gasoline prices.
Brent crude oil also rose by more than 4% on Tuesday.
Concerns regarding the Strait of Hormuz, the planet’s most critical oil transit choke point, were amplified by a collision between two oil tankers in the Gulf of Oman. The incident is under investigation, but the Joint Maritime Information Centre attributed the problems to “navigation-related issues.”
“The collision and subsequent fire appear to have raised concerns that the situation could spiral out of control in the world’s busiest oil shipping lane,” wrote Robert Yawger, director of energy futures at Mizuho Securities, in a Tuesday report.
However, Yawger noted that the Strait of Hormuz has never been closed, not even during the Iran-Iraq war in the 1980s.
