Global oil prices climbed on Tuesday, reversing the previous session’s brief decline, as the ongoing U.S.-Israel conflict with Iran continued to disrupt supply routes and heighten fears of a prolonged energy shock.
Brent crude rose 3.2 per cent to $103.38 per barrel, maintaining its position above the $100 threshold, while West Texas Intermediate gained 3.1 per cent to $95.31 per barrel.
The rebound follows a temporary dip on Monday amid reports that some vessels had successfully navigated the Strait of Hormuz. However, the waterway, through which roughly one-fifth of global oil supply passes, remains largely inaccessible, with Tehran effectively enforcing a blockade.
Tensions escalated further after Donald Trump criticised North Atlantic Treaty Organization allies for declining to support U.S. efforts to secure the strait. In response, Iran warned it would target any vessel transporting goods that benefit the United States or its allies, intensifying risks for global shipping.
Major container shipping firms have already suspended transit through the strait, citing crew safety concerns and rising insurance costs. At the same time, oil producers in the Persian Gulf are scrambling to reroute exports or scale down output, tightening global supply further.
Security concerns intensified after a projectile struck a tanker near the port of Fujairah, according to reports citing the United Kingdom Maritime Trade Operations Centre. Although damage was minimal, the incident underscored growing vulnerability in the region. Separately, authorities in the United Arab Emirates confirmed that a drone attack triggered a fire at a key oil facility, compounding fears of supply disruption.
The sustained increase in oil prices, up more than 40 per cent since late February when joint U.S.-Israeli strikes on Iran began, is now feeding into broader macroeconomic concerns, particularly inflation.
Central banks are increasingly under pressure to respond. The Reserve Bank of Australia on Tuesday raised interest rates to a 10-year high, warning of “material” inflation risks stemming from the conflict. A series of major monetary policy decisions are due this week from the Federal Reserve, European Central Bank and Bank of Japan, with markets closely watching for signals on how policymakers intend to manage energy-driven price pressures.
Rising crude prices have also weighed on global equities, reflecting concerns over higher input costs and tighter financial conditions. Analysts at Fairlead Strategies noted that while U.S. crude futures briefly tested resistance near the $100–$102 range, a pause in the rally could offer short-term relief for equity markets, given the inverse correlation between oil prices and stock performance this year.
Geopolitical tensions continue to complicate the outlook. Trump has reportedly called for a postponement of a planned meeting with Xi Jinping, while urging China to deploy naval forces to secure the Strait of Hormuz. Beijing, however, appears reluctant to intervene, maintaining energy ties with Tehran. Notably, Iranian authorities have allowed Chinese tankers to pass through the strait, even as they threaten vessels linked to Western interests.
Meanwhile, the conflict has intensified on the ground. Reports suggest that senior Iranian figures, including security chief Ali Larijani and Basij commander Gholamreza Soleimani, may have been killed in recent airstrikes, although official confirmation remains pending.
