Oil Prices Increase 8% to Highest Level Since 2024 Amid Escalating Middle East Tensions

Oil Prices Surge to Highest Since July 2024

Brent futures rose $6.07, or 7.8%, to $83.81 a barrel, while U.S. West Texas Intermediate increased $6, or 8.4%, to $77.23 at 10:35 a.m. EST (1535 GMT) on Tuesday.

The surge in oil prices marks a third consecutive session of gains, driven by the escalating conflict between the U.S. and Israel against Iran, which has disrupted oil and gas fuel shipments in the Middle East. The widening conflict has heightened fears of a prolonged conflict, further contributing to the price increase.

The premium of Brent over WTI rose to $8 a barrel, its highest since November 2022. Analysts have noted that when this premium rises above $4, it supports crude exports from the U.S.

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The conflict has resulted in tankers and container ships avoiding the Strait of Hormuz, through which a fifth of the world's oil and liquefied natural gas typically passes, due to insurers cancelling coverage for vessels and global oil and gas shipping rates soaring. Concerns increased after Iranian media reported on Monday that Iran will fire on any ship trying to pass through the Strait of Hormuz.

U.S. President Donald Trump stated that the U.S. and Israeli air attacks are projected to last four to five weeks, but could go on longer. The conflict has already led to oil and gas infrastructure shutdowns in several countries, including Qatar, Israel, and Saudi Arabia.

Key developments:

• Saudi oil giant Aramco is attempting to reroute some of its crude exports to the Red Sea to bypass the Strait of Hormuz.
• U.S. diesel futures were up nearly 14% to their highest since September 2023.
• U.S. gasoline futures were up nearly 5% at $2.48 a gallon to their highest since July 2024.
• Crack spreads, which measure refining profit margins, soared to their highest since 2023.
• Global natural gas markets saw benchmark Dutch contracts, British gas prices, and European and Asian LNG prices jump.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline