Oil Prices Rise 2% As US-Iran Fighting Stokes Supply Fears

(MENAFN- Khaleej Times) Oil prices climbed about 2% to a one-week high on Wednesday as a resumption in fighting between the U.S. and Iran renewed fears of supply disruptions from the Middle East.

Brent futures rose $1.55, or 1.7%, to $92.04 a barrel at 10:33 a.m. EDT (1433 GMT). U.S. West Texas Intermediate (WTI) crude rose $1.84, or 2.2%, to $87.60.

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That puts Brent on track for its highest close since August 24 and WTI on track for its highest close since August 20.

Iran said on Tuesday it would reciprocate if the U.S. honoured its commitments under a June interim deal on halting their conflict. Tensions remained high after U.S. President Donald Trump threatened Tehran with further strikes.

Oil prices rose on Monday after the first exchange of direct attacks between the U.S. and Iran since late July, and following reports of two tankers coming under fire leaving the Strait of Hormuz, the global oil supply waterway that Iran has effectively closed to shipping.

The six-month-old conflict had shifted into an economic standoff before a US attack on Iran's Larak Island on Sunday, which Iran responded to by launching missiles overnight at two U.S. air bases in Jordan.

"Fresh hostilities between the U.S. and Iran raised concerns about prolonged disruptions to energy flows through the Strait of Hormuz," Saxo Bank analyst Ole Hansen said.

The number of visible commodity vessels transiting the Strait of Hormuz held at about five on Monday, below the 10-day average of about 14 per day, Kpler shipping data showed. None of the five ships were liquid tankers.

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

Diesel price hike

Disruptions at refineries around the world, especially in the Middle East due to the US-Iran war and in Russia due to Ukrainian attacks, have caused diesel prices to spike.

In the U.S., diesel futures were trading around a five-month high on Tuesday after soaring about 47% over the past 10 weeks, boosting the diesel crack spread, which measures refining profit margins, to a record high over $104 a barrel, according to LSEG data.

Russian air attacks killed 12 people and injured many more in Kyiv and the surrounding region early on Tuesday, authorities said, marking the sixth straight day of intense strikes on the Ukrainian capital.

Russia was the world's third-biggest crude oil producer behind the US and Saudi Arabia in 2025, according to US energy data, and is a member of the OPEC+ group of countries, which includes OPEC and allies.

US oil inventories

The oil market waited for weekly storage reports from the American Petroleum Institute trade group later on Tuesday and the U.S. Energy Information Administration on Wednesday.

Analysts estimated energy firms pulled 0.8 million barrels of crude from storage during the week ended August 28.

If correct, that would be the first decline in five weeks and compares with an increase of 2.4 million barrels in the same week last year and an average decrease of 5.1 million barrels over the past five years (2021 to 2025).

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