Oil prices jumped about four per cent to a one-week high on Tuesday as a resumption in fighting between the US and Iran renewed fears of supply disruptions from the Middle East.
Brent futures rose $3.44, or 3.8 per cent, to $93.93 a barrel at 13:10 EDT (17:10 GMT), while US West Texas Intermediate crude rose $3.72, or 4.3 per cent, to $89.48.
That puts Brent on track for its highest close since August 20 and WTI on track for its highest close since July 23.
The US launched new air strikes on Iranian targets on Tuesday, 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, 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 Persian Gulf, despite a threat by US President Donald Trump to hit Iran "hard" in response to the renewed Iranian strikes, and a warning from US Treasury Secretary Scott Bessent that Washington was about to impose new sanctions.
"Today at 12:00 ET (16:00 GMT), US forces began striking Islamic Revolutionary Guard Corps targets in Iran," US Central Command posted on social media. "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."
The fresh hostilities, "raised concerns about prolonged disruptions to energy flows through the Strait of Hormuz," Saxo Bank analyst Ole Hansen said.
Disruptions at refineries around the world, especially in the Middle East due to the US-Iran war and in Russia due to Ukrainian attacks, have caused diesel prices to spike.
In the US, diesel futures were trading around a 52-month high on Tuesday after soaring about 51 per cent over the past 10 weeks, boosting the diesel crack spread, which measures refining profit margins, to a record high near $106 a barrel, according to LSEG data.
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 was the world's third-biggest crude oil producer behind the US and Saudi Arabia in 2025, according to US energy data, and is a member of the OPEC+ group of countries, which includes OPEC and allies.
The oil market was watching for weekly storage reports from the American Petroleum Institute trade group later on Tuesday and the US Energy Information Administration on Wednesday.
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).
(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)
