- Oil prices are set for their biggest weekly gain since July amid US-Iran hostilities
- Brent crude traded near $96 a barrel, up over 7% for the week, hitting six-week highs
- Iran's missile and drone attacks raise risk of prolonged disruptions in the Strait of Hormuz
Oil prices are heading for their biggest weekly gain since July, with renewed US-Iran hostilities reviving fears of prolonged disruptions to crude shipments through the Strait of Hormuz.
Brent crude was trading around $96 a barrel and was up more than 7% for the week, while West Texas Intermediate was near $92. Both benchmarks hit six-week highs earlier in the week as fresh US strikes on Iran and retaliatory attacks by Tehran raised the risk premium in energy markets.
The latest escalation follows a period of relative calm. Iran has continued targeting vessels transiting the Strait of Hormuz and launched missile and drone attacks across the region, while Israel has warned it could resume fighting if necessary. The developments have renewed concerns that the conflict could enter another cycle of escalation.
US officials have pointed to continued regional flows, while Iraq increased its crude exports in August, offering some supply relief. Saudi Arabia also kept the official selling price of its flagship crude unchanged for next month, potentially suggesting that physical-market tightness has not worsened as sharply as prices might imply.
Before the current conflict, roughly one-fifth of global oil and LNG supplies moved through the Strait of Hormuz. Any sustained disruption could therefore have consequences well beyond crude, particularly for refined products and natural gas.
Diesel, LNG Add To Energy Shock
Brent is now nearly 60% higher this year, while refined products have recorded even sharper gains. Diesel prices have been particularly strong amid disruptions at refineries in the Middle East and Russia, with US retail prices reaching their highest level since mid-2022. European diesel inventories are also well below seasonal levels.
Meanwhile, Asian spot LNG prices climbed to their highest level in more than three years this week as buyers priced in tighter energy supplies and elevated shipping risks.
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