Oil prices climbed sharply on Tuesday as the world watched anxiously for a U.S.-imposed deadline for Iran to reopen the Strait of Hormuz, the crucial waterway through which roughly a fifth of global oil passes.
President Donald Trump warns that Iran could face attacks on bridges and power plants if Tehran fails to comply.
By early trading, Brent crude had risen $1.74, or 1.6%, to $111.51 a barrel, while U.S. West Texas Intermediate crude jumped $3.45, or 3.1%, to $115.86.
Trump has set a deadline of 8 p.m. EDT Tuesday (00:00 GMT Wednesday), threatening to rain “hell” on Tehran if the strait remains closed. But Iran, rejecting a ceasefire proposal mediated by Pakistan, insisted that only a permanent end to the conflict would satisfy its terms.
The standoff has left the oil market on edge. Priyanka Sachdeva, senior market analyst at Phillip Nova, said, “Oil is holding its gains because the battlefield risk is no longer theoretical. Attacks on energy and shipping assets continue, and even if the war ends, damage to infrastructure could sideline barrels for months.”
Exports from Gulf producers have already been hit hard, with the strait effectively closed since 28 February following U.S. and Israeli strikes.
Tim Waterer, Chief Market Analyst at KCM Trade, noted, that “Clock-watching is now playing almost as big a role in oil markets as the fundamentals themselves in the run-up to Trump’s ultimatum. Supply worries from Hormuz and damaged facilities are keeping prices elevated.”
Diplomatic efforts continue, with the United Nations Security Council expected to vote on a resolution to protect commercial shipping in the strait. However, the measure has been watered down after China opposed authorising force.
Meanwhile, regional tensions show no sign of easing. Explosions were reported near Damascus as Israel intercepted Iranian missiles, while Saudi Arabia said it destroyed seven ballistic missiles aimed at its Eastern Region, with debris falling near energy facilities.
The conflict is squeezing global oil supply. Spot premiums for U.S. crude have hit record highs as Asian and European refiners scramble for alternatives.
Saudi Aramco has raised the official selling price of Arab Light crude to Asia for May delivery, setting a record premium of $19.50 above the Oman/Dubai average.
Adding to the squeeze, Russia reported damage to the Caspian Pipeline Consortium terminal after Ukrainian drone attacks, affecting 1.5% of global oil supply.
OPEC+ agreed on Sunday to lift oil output quotas by 206,000 barrels per day in May, but the increase is largely symbolic, as strait closures are preventing key producers from exporting the extra oil.
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U.S. negotiators Steve Witkoff and Jared Kushner will visit Russia then Ukraine over the weekend, Russian state news agency TASS has reported, citing an unnamed source. Ukrainian President Volodymyr Zelenskyy has also said American envoys will visit the capitals of both countries.
The Iranian Health Ministry said at least 18 people were killed and 142 others injured in U.S. airstrikes carried out between 30 August and 2 September.
U.S. negotiators Steve Witkoff and Jared Kushner have arrived in Moscow for peace talks on the Russia-Ukraine conflict, two people familiar with the matter said. They were met by Russian Presidential Envoy Kirill Dmitriev.
U.S. efforts to squeeze Iran’s economy through an oil blockade and sanctions are becoming increasingly difficult for Tehran to withstand, according to three senior Iranian sources. Washington is escalating pressure in hopes of securing concessions in future negotiations.
Start your day informed with the AnewZ Morning Brief. Here are the top stories for the 4th of September, covering the latest developments.
An Iranian tanker was hit by U.S. forces on Saturday near Iran's key oil export hub, Kharg Island, in the Gulf, the semi-official Iranian news agency Tasnim reported.
U.S. efforts to squeeze Iran’s economy through an oil blockade and sanctions are becoming increasingly difficult for Tehran to withstand, according to three senior Iranian sources. Washington is escalating pressure in hopes of securing concessions in future negotiations.
The Iranian Health Ministry said at least 18 people were killed and 142 others injured in U.S. airstrikes carried out between 30 August and 2 September.
The Iranian Army has again struck at U.S. bases in Kuwait and the United Arab Emirates in retaliation for U.S. attacks on southern and western parts of Iran late on Tuesday, which reportedly killed 18 people and injured more than 100 others.
The U.S. has launched a fresh wave of strikes on Iran, targeting Islamic Revolutionary Guard Corps (IRGC) sites as Tehran retaliated against U.S. positions across the region, while Iranian officials said at least five people were killed and dozens wounded at a wedding near Sirik.
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