Oil prices rise as renewed US-Iran fighting fuels supply concerns

Oil prices rose by about $1 on Tuesday, September 1, as renewed fighting between the United States and Iran revived concerns about potential disruptions to crude supplies from the Middle East, the world’s most important oil-producing region.

Brent crude futures were up $1.05, or 1.2%, at $91.54 a barrel by 0455 GMT, while U.S. West Texas Intermediate (WTI) crude gained $1.27, or 1.5%, to $87.03, according to data obtained by Reuters.

The gains followed a stronger session on Monday, when Brent settled 2.7% higher after briefly reaching its highest level since August 25. WTI ended the session up 2.8%, having earlier touched its highest level since August 21.

U.S. President Donald Trump on Monday threatened further strikes against Iran after the two countries exchanged direct attacks on Sunday for the first time in a month. The escalation came after the conflict had recently shifted towards an economic standoff.

"These bring the potential for Iranian retaliation back into the equation. That in turn raises the prospect of damage to energy infrastructure around the Gulf and adds fresh uncertainty for shipping through the Strait of Hormuz. Both of those risks are being reflected in the firmer tone in crude prices," said Tim Waterer, chief market analyst at KCM.

Shipping activity through the Strait of Hormuz remains significantly below pre-conflict levels. The number of visible commodity vessels transiting the waterway stood at five per day on Monday, unchanged from the previous day and well below the 10-day average of around 14, according to shipping data from Kpler. None of the five vessels were liquid tankers.

Diplomatic efforts by mediators including Qatar and Oman to broker an agreement to reopen the Strait of Hormuz have so far failed to gain traction. The strategic waterway carried about one-fifth of global oil supplies before the war erupted in late February.

Iran closed the waterway after the United States and Israel attacked the country on February 28.

The risks to shipping and oil supplies were underscored on Tuesday when the United Kingdom Maritime Trade Operations agency (UKMTO) said a tanker had reported being struck by three projectiles while sailing out of the Strait of Hormuz. No casualties or environmental impacts were reported.

"Despite satellite tracking firms suggesting oil flowing through Hormuz is around 6 million barrels per day, that is well below pre-conflict levels," ANZ analysts said in a note.

"In the meantime, the buffers the global oil market has been relying on are becoming exhausted. U.S. inventories are nearing minimum levels, while China's ability to keep imports low will be tested as seasonal demand picks up."

U.S. crude oil inventories in the Strategic Petroleum Reserve fell by about 3.1 million barrels last week, leaving stockpiles at 286.6 million barrels.

Analysts polled by Reuters in August expect oil prices to remain above $80 a barrel in 2026 as disruptions to shipping continue.

By Tamilla Hasanova