Oil prices rise amid renewed US-Iran tensions in Middle East

Oil prices are climbing amid fears of escalation in the Middle East following the first exchanges of fire between the United States and Iran in more than a month over the weekend.

Brent crude, the international benchmark, rose more than 1 percent on Tuesday to top $91 a barrel, extending a more than 2.5 percent gain from the previous day.

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Brent scheduled for November delivery stood at $91.44 a barrel as of 05:00 GMT, up from just over $88 a barrel when markets closed on Monday.

The latest rise came amid renewed tensions in the Middle East following US strikes on Iran’s Larak ⁠Island and Iranian attacks on two bases used by US forces in Jordan.

In a television interview on Monday, US President Donald Trump pledged to respond to Tehran’s strikes on the King Hussein and Al Azraq bases in Jordan.

“We’re going to hit them hard,” Trump told Fox News.

The United Kingdom Maritime Trade Operations, a monitoring centre operated by the British Royal Navy, reported late on Monday that a tanker was struck by three unknown projectiles while crossing the Strait of Hormuz, where Iranian forces have carried out numerous attacks on commercial shipping.

No casualties were reported in the attack, and no government or group has claimed responsibility.

Oil prices have been volatile since a 60-day ceasefire between the US and Iran expired in mid-August, denting hopes of a return to pre-war levels of maritime traffic in the Strait of Hormuz, a conduit for about one-fifth of global oil supplies in peacetime.

After peaking at nearly $94.40 a barrel on August 21, Brent has been trading in the range of $86-$91 since the truce between the sides lapsed without an extension or permanent peace deal.

“Hopes of a near-term deal to open the strait have faded as the conflict appears back on an escalatory trajectory in the wake of recent attacks,” Saul Kavonic, head of energy research at MST Financial, told Al Jazeera.

“The oil market is increasingly realising we may be in for a protracted ‘no war, no peace’ situation, with only partial volumes flowing through the strait, that could last well into 2027,” Kavonic said.

Traffic in the Strait of Hormuz, which saw roughly 130 daily transits before the war, remains heavily constrained, with many vessels sailing “dark” with their Automatic Identification System turned off to lessen the threat of Iranian drones and missiles or interception by the US Navy.

The strait saw 107 transits from August 24 to August 30, down from 121 crossings the prior week, according to ship monitoring platform MarineTraffic.

Tony Sycamore, a senior market analyst at IG Markets, said oil prices could ease in spite of the latest flare-up in violence if “dark” shipments tick up again in the strait.

“I think after the latest skirmish, and the risk of further exchanges of fire, the path of least resistance for oil is higher in the short term,” Sycamore told Al Jazeera.

“However, if this flare-up were to fade by the weekend and those dark-ship and ship-to-ship transfers resume, you would expect this week’s geopolitical premium to get stripped out pretty quickly,” Sycamore said.

“Overall, what we are dealing with is a day-to-day proposition.”