Oil Prices Surge Over $4 on Renewed US-Iran Fighting and Supply Concerns
Market Reactions and Key Developments
By Scott DiSavino
Oil Price Movements
NEW YORK, Sept 1 (Reuters) - Oil prices jumped more than $4 a barrel on Tuesday, settling at a five-week high, as traders feared more supply disruptions from the Middle East due to renewed fighting between the U.S. and Iran.
Brent futures rose $4.16, or 4.6%, to settle at $94.65 a barrel. U.S. West Texas Intermediate (WTI) crude rose $4.46, or 5.2%, to settle at $90.22.
That was the highest close for Brent since July 24 and for WTI since July 23.
US-Iran Tensions and Middle East Supply Risks
The U.S. launched new air strikes on Iranian targets, quashing hopes that an exchange of fire last weekend might not presage a wider renewal of hostilities.
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.
Tehran remained defiant, warning that it would prevent oil being exported from the Gulf, despite a threat by U.S. President Donald Trump to hit Iran "hard" in response to the renewed Iranian strikes, and a warning from U.S. Treasury Secretary Scott Bessent that Washington was about to impose new sanctions.
Statements from US Central Command
"Today at 12 p.m. ET (1600 GMT), U.S. forces began striking Islamic Revolutionary Guard Corps targets in Iran," U.S. Central Command posted on X. "The strikes follow recent attempted attacks by the IRGC against commercial shipping in the Strait of Hormuz and against American service members deployed to the region."
Analyst Perspectives
The fresh hostilities "raised concerns about prolonged disruptions to energy flows through the Strait of Hormuz," Saxo Bank analyst Ole Hansen said.
Diesel Price Spike
Global Refinery Disruptions
Disruptions at refineries around the world, especially in the Middle East and in Russia, have caused diesel prices to spike.
US Diesel Market
In the U.S., diesel futures jumped to a 52-month high on Tuesday after soaring 51% over the past 10 weeks, boosting the diesel crack spread, which measures refining profit margins, to a record high of around $107 a barrel, according to LSEG data.
Impact of Russian Attacks
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's Role in Global Oil Supply
Russia was the world's third-biggest crude oil producer behind the U.S. and Saudi Arabia in 2025, according to U.S. energy data, and is a member of the OPEC+ group of producing countries.
US Oil Inventories
Anticipated Storage Reports
The oil market was watching for weekly storage reports from the American Petroleum Institute trade group on Tuesday and the U.S. Energy Information Administration on Wednesday.
Analyst Estimates
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). [EIA/S] [API/S]
(Reporting by Scott DiSavino in New York, Robert Harvey in London, Noel John and Sumit Saha in Bengaluru and Emily Chow in Singapore; Editing by Aidan Lewis, Kirsten Donovan, David Goodman, David Gregorio and Bill Berkrot)