Brent Crude Surges Past $90 on Middle East Escalation, Tanker Strikes
Oil prices jumped above $90 a barrel as Iranian forces struck neighboring infrastructure and targeted commercial tankers in the Strait of Hormuz, raising renewed fears of global energy supply disruptions.
Brent crude jumped over 2% to trade above $90 a barrel on Tuesday as military clashes between the United States and Iran sharply escalated. Iranian forces attacked infrastructure in neighboring Gulf states and targeted commercial shipping in the blocked Strait of Hormuz, threatening a critical chokepoint for global energy markets.
Iran’s Revolutionary Guards claimed responsibility for halting two "non-compliant oil tankers" attempting to transit the strategic waterway. In broader regional attacks, Kuwait confirmed strikes on its power and water desalination plants, while Bahrain and Jordan reported intercepting waves of incoming drones and missiles.
The risk to crude supplies widened further as Iran's Houthi allies threatened to blockade Saudi Arabian ports. Such a move would severely disrupt Riyadh's efforts to route millions of barrels of daily oil exports through the Red Sea, a vital alternative bypass while the Strait of Hormuz remains blocked.
Despite the mounting geopolitical turbulence, equity markets largely brushed off the immediate energy shock. A broad rebound in technology shares pushed major global indices higher, with Tokyo’s Nikkei 225 climbing 3.3% and Seoul advancing 3.6%.
Investor focus in the equity markets is rapidly shifting to upcoming corporate earnings to justify recent sector valuations. "Big Tech earnings now need to prove that AI revenues, margins and cash flow can justify the scale" of the huge investments in AI infrastructure, noted Stephen Innes of SPI Asset Management.
Energy Supply Risks
The International Energy Agency (IEA) warned that the physical risks to global energy infrastructure are compounding. "The escalation in hostilities affecting the Strait of Hormuz and energy infrastructure in the region increases security of supply concerns and uncertainty over the market outlook," said IEA Executive Director Fatih Birol.
While Birol noted that crude markets still benefit from "several cushioning factors," including alternative routing by Saudi Arabia and the UAE, refined products are facing tighter constraints. Furthermore, prolonged disruptions to Gulf liquefied natural gas (LNG) exports carry severe consequences for international buyers.
Additional LNG supplies from the US and Canada have offset about 70% of lost shipments through the Strait of Hormuz. However, Birol warned that further delays in resuming Gulf exports "will be felt by all LNG importers, including Europe as it looks to refill its gas storage for next winter."
Washington and Tehran showed few signs of an immediate de-escalation following recent US airstrikes. Still, Iranian foreign ministry spokesman Esmaeil Baqaei confirmed that diplomatic exchanges with Washington via mediators remain ongoing.
