Petroleum prices advanced on Tuesday as market analysts indicated that geopolitical tensions would continue supporting higher valuations, despite the absence of verified production disruptions related to the ongoing Iran-Israel hostilities.
Brent crude futures gained 82 cents, representing a 1.1% increase to reach $74.05 per barrel by 08:40 GMT, while U.S. West Texas Intermediate crude advanced 77 cents, or 1.1%, to $72.54, reports Reuters.
Trading sessions displayed considerable volatility, with both benchmark contracts initially surging over 2% before experiencing temporary declines and subsequently recovering their gains.
As OPEC’s third-largest producer, Iran’s potential involvement in an expanded conflict raises concerns about possible export disruptions from the region.
Market participants are particularly monitoring potential impacts on maritime traffic through the Strait of Hormuz, a critical chokepoint handling approximately 19 million barrels of crude oil and refined products daily.
“The market is largely worried about disruption through Hormuz, but the risk of that is very low,” said Saxo Bank analyst Ole Hansen.
Hansen noted that neither party has an incentive to close the waterway, as Iran would forfeit revenue while the United States seeks lower energy costs to combat inflation.
While no actual supply interruptions have materialized, vessels operating near the Strait and surrounding Gulf waters have encountered electronic warfare interference affecting their navigation capabilities.
Tuesday morning reports from shipping sources described a collision involving three vessels near the Strait of Hormuz, underscoring the operational hazards facing companies transporting energy supplies through the area.
Despite potential disruption risks, indicators suggest adequate oil availability amid expectations of reduced consumption patterns.
The International Energy Agency’s monthly assessment, published Tuesday, reduced its global oil demand projection by 20,000 barrels per day from the previous month’s forecast, while simultaneously raising supply estimates by 200,000 barrels per day to 1.8 million barrels daily.
According to PVM Associates analyst Tamas Varga, investors are also monitoring central bank monetary policy decisions—particularly the upcoming Federal Open Market Committee meeting scheduled for Tuesday—which influences Federal Reserve interest rate adjustments.
