By Adedapo Adesanya
Brent crude neared $95 on Tuesday, rising by 4.6 per cent or $4.16 to $94.65 per barrel, as traders feared more supply disruptions from the Middle East due to renewed fighting between the United States and Iran.
Also, the price of US West Texas Intermediate (WTI) crude went up by $4.46 or 5.2 per cent during the session to $90.22 per barrel, as America launched a fresh wave of strikes against targets in Iran and the Islamic Republic said it retaliated.
President Donald Trump said the US strikes were in retaliation for Iran trying to put mines in the Strait of Hormuz and for an earlier attack on a military base in Jordan. He warned of more attacks to come if Iran responded.
On Monday, oil prices had already risen after that first exchange of direct attacks since July and after reports of two tankers being hit leaving the Strait of Hormuz, the global oil supply waterway that Iran has effectively closed to shipping.
Also, US Treasury Secretary Scott Bessent dismissed the importance of the Strait of Hormuz on Tuesday, saying the crucial waterway for Persian Gulf energy that’s been controlled by Iran during the recent conflict will be bypassed by oil pipelines.
“That will be bypassed in two years,” Mr Bessent said at an event, adding that, “In two years, the Strait of Hormuz will be like a worthless piece of water.”
Saudi Arabia pushed roughly 7 million barrels per day through its East-West pipeline to the Red Sea during the Hormuz shutdown, using Yanbu as an alternative export point. The route provided Saudi crude with a way around Hormuz, although tanker traffic through the Red Sea later faced its own problems from Houthi attacks near Bab el-Mandeb.
The United Arab Emirates (UAE) has a more direct workaround. ADNOC plans to build its West-East 1 Pipeline and double oil export capacity through Fujairah, which sits outside Hormuz. The project is expected online in 2027. Iraq and Kuwait are also pursuing plans.
Earlier, two VLCCs carrying Saudi oil (Sidr and Senegal Prosperity) were hit by projectiles while exiting the Strait of Hormuz on Tuesday, threatening the fragile rebound in Gulf oil exports, just as Aramco lifted August loadings in the Gulf to 700,000 barrels per day.
Disruptions at refineries around the world, especially in the Middle East and in Russia, have caused diesel prices to spike.
