Oil prices surged more than 2% on August 31, as renewed military tensions between the United States and Iran raised concerns over disruptions to crude supplies through the Strait of Hormuz.
Brent crude futures climbed USD 2.51, or 2.85%, to USD 90.61 a barrel by 0241 GMT. US West Texas Intermediate (WTI) crude rose USD 2.13, or 2.55%, to USD 85.53 a barrel. The gains came after Brent had fallen more than 4% last week.
The current surge in oil prices was triggered by the recent attack by US forces on two Iranian missile-launching sites on Larak Island in the Gulf of Hormuz over the weekend. This move came after the latest US attacks on Iranian targets since late July.
On its part, Iran responded to the attack with an offensive on two US airbases in Jordan, according to Iranian media sources citing the Iranian Revolutionary Guard Corps. This latest round sparked fears that the dispute is heading for a new escalation phase.
According to analysts, the duration and magnitude of the escalation process will dictate where oil prices are headed next.
The US also indicated that it could impose additional secondary sanctions on Iran, adding another layer of uncertainty for energy markets. For now, traders are closely watching developments around the Strait of Hormuz. Any further attack on shipping or sustained reduction in tanker traffic could tighten supply expectations and push crude prices higher.
Brent and WTI are still expected to record modest monthly declines in August after last week's sell-off. However, renewed geopolitical risks have quickly shifted market attention back to supply security and the possibility of another oil-price surge.
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