US-Israel-Iran conflict escalates, and supply risks increase, Brent and WTI rise 8-9% since Monday
Oil prices have risen 8-9% since Monday as the escalating US-Israel-Iran conflict and threats to ship traffic through the Strait of Hormuz fuel fears of supply disruptions from a key Middle Eastern production region.
Tanker ships continue to avoid the Strait of Hormuz, which is raising shipping costs, and oil prices will remain high in the coming days.
Brent crude futures traded at $79.44 a barrel, up $1.70 or 2.2%, as of 04:00 GMT. On Monday, the contract had risen to $82.37, its highest level since January 2025, but partially relinquished those gains, closing up 6.7%.
WTI rose $1.17, or 1.6%, to $72.40 a barrel. In the previous session, the contract initially climbed to its highest level since June 2025 before retreating, but still closed up 6.3%.
Tensions are escalating in the region, with the Strait of Hormuz effectively closed and Iranian energy infrastructure targeted. Upside risks remain and will continue to increase as the conflict drags on.
The US and Israeli air war against Iran expanded on Monday; Israel also attacked Lebanon. Iran retaliated with attacks on energy infrastructure in countries with US bases in the Gulf and on tankers in the Strait of Hormuz.
Approximately 20% of the world's oil and gas passes through the Strait of Hormuz.
Concerns about passage through the Strait of Hormuz have increased after Iranian media reported on Monday that a senior Iranian Revolutionary Guard official warned the strait was closed and that Iran would fire on any ship attempting to pass through.
With insurers canceling coverage for vessels, tankers and container ships are avoiding the area, causing global oil and gas shipping rates to skyrocket.
While concerns about oil flow through the Strait of Hormuz remain, a greater risk for the market is that Iran will target additional energy infrastructure in the region. This could lead to longer-term disruptions.
Oil prices are inevitably expected to remain high in the coming days as markets focus on the impact of the escalating conflict in the Middle East. The 2026 Brent oil price forecast has risen from $65 to $80 per barrel, while prices could reach $120-150 in the event of a prolonged conflict.
Refined product futures are also rising, given the Middle East's importance as a fuel supplier and the risk to its processing facilities.
On Monday, Saudi Arabia shut down its largest domestic oil refinery following a drone attack.
US ultra-low sulfur diesel futures rose 4.2% to $3.0207 a gallon after reaching a two-year high on Monday, while gasoline futures gained 1.7% to $2.4113 a gallon after rising 3.7% in the previous session.
European diesel futures rose 4.3% to $925 a metric ton after a 18% increase on Monday.
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