Attack after attack: oil and diesel prices rise after US-Iran firefight
Quick Look
- As a result of the exchange of fire between the US and Iran in the Persian Gulf and the Strait of Hormuz, five Iranian tankers were destroyed, and Iran attacked the American Al-Azrak base in Jordan, damaging the parking spaces of F-35, F-16 and F-15 aircraft and shelters for combat aircraft.
- The conflict led to an increase in Brent oil prices by over 60%. since the beginning of the year and record diesel prices in the US since mid-2022, with deteriorating global oil stocks and an ongoing stalemate in diplomatic negotiations.
AI-generated summary
Why It Matters
The war in the Middle East has been going on for 7 months, and the parties are arguing over control of the Strait of Hormuz, through which one fifth of the world's oil and gas exports pass. Global oil supplies are deteriorating, with the price of Brent rising by more than 60%. since the beginning of the year.
Attack after attack
Oil prices jumped after the US military reported the destruction of five Iranian tankers in the Persian Gulf late on Tuesday. This was in retaliation for Iran's attacks on a US Navy ship in the last two days.
The Iranian Islamic Revolutionary Guard Corps (IRGC) reported at night an attack carried out on American forces stationed at the Al-Azrak base in Jordan. Tehran claims it was a response to previous US strikes on Iranian tankers.
According to the Corps, the following items were damaged in the attack: places where F-35, F-16 and F-15 aircraft are stationed and shelters for combat machines at the Al-Azraq base, about 100 km east of Amman.
The Guard Corps also announced retaliatory attacks on oil tankers near Kuwait and Bahrain.
The IRGC also reported on Tuesday "the seizure of one of the US military's most modern underwater drones at the entrance to the Strait of Hormuz."
The US Army reported that one of its "older model" drones failed in the strait area. She did not specify whether it was a device seized by Iran.
World oil supplies are dwindling
Analysts indicate that diplomatic negotiations between the US and Iran remain at an impasse. The war in the Middle East is already entering its 7th month.
The two sides are arguing over control of the Strait of Hormuz, through which one-fifth of global oil and gas exports normally pass.
Global oil stocks and reserves are deteriorating and, in typical pattern, the US and Iran continue to counterattack and warn, said Darrell Fletcher, managing director of commodity markets at Bannockburn Capital markets.
Since the beginning of the year, the price of Brent crude oil has increased by over 60%.
The price of Brent crude oil has increased by over 60% this year. and it is just shy of three-digit ratings.
The prices of petroleum products, such as diesel, have increased even more because the conflict in the Middle East has also spread to the Red Sea near Saudi Arabia, and the war between Ukraine and Russia continues.
Diesel oil - the "workhorse" of the global economy
US diesel prices have reached their highest level since mid-2022, surpassing the peak seen in the early stages of the Middle East war.
Diesel fuel, described as the "workhorse" of the global economy, is needed for everything from power and heat generation to transport and agriculture.
What to Watch
AI outlook — possibilities, not facts
Brent crude oil prices may reach triple-digit levels in the coming weeks
Likely · Within weeks
U.S. diesel prices will remain elevated for at least several weeks
Likely · Within weeks
Open Questions
- Will diplomatic negotiations between the US and Iran resume?
- How long will the increase in diesel prices last?
- Will attacks on tankers near Kuwait and Bahrain take place?
