US-Iran escalation pushes oil to four-week high, disrupts Strait of Hormuz

Global crude oil prices surged to their highest levels in four weeks as the United States and Iran intensified military operations following the collapse of a June ceasefire agreement. Brent crude rose 3.47–4.55% to $86–$87 per barrel, while US West Texas Intermediate climbed to $80–$81 per barrel, marking the largest price movement since before the June 17 memorandum of understanding between the two countries.

The escalation included US President Donald Trump reinstating a naval blockade of Iranian shipping and proposing a 20% fee for guarding the Strait of Hormuz, while Iran responded with cruise missile strikes on two UAE-flagged tankers in the critical waterway. Shipping traffic through the Strait declined to its lowest level in two months, with tanker transits falling sharply as concerns over supply disruption intensified. One Indian crew member was killed and eight wounded in the Iranian missile strikes on the UAE vessels.

Asian refiners and oil buyers responded by pivoting back to US crude supplies after weeks of attempting to rely on traditional Middle Eastern sources. Spot market negotiations for American cargoes resumed across Japan, the Philippines, Pakistan, and other nations heavily dependent on Hormuz-routed oil. US crude exports hit record levels, with April exports averaging 5.6 million barrels per day—21% above the previous record set in December 2023—as Asian importers sought to diversify away from Middle Eastern oil amid heightened geopolitical risk.

Liquefied natural gas prices in Asia also climbed to their highest levels since late March, reflecting investor anxiety over prolonged disruptions to shipping routes. Analysts warned that oil prices could remain volatile in the $85–$90 range if tensions persist. The ceasefire collapse occurred despite both sides initially signing the June agreement, with diplomatic efforts by Qatar, Pakistan, and Oman continuing to prevent further escalation.