Market Reaction
Oil prices extended gains in European trading on Tuesday, with Brent Oil Futures for November rising 1.8% to $92.11 per barrel and W&T Offshore Inc (NYSE:WTI) crude futures climbing 2.2% to $87.67 per barrel. Both contracts had settled nearly 3% higher in the previous session, marking a sharp rebound after renewed U.S.-Iran hostilities placed the Strait of Hormuz back at the centre of market concerns.
Geopolitical Developments
The latest escalation followed a U.S. strike on Iranian military targets on Larak Island, ending a weeks‑long lull in direct attacks. Iran responded by launching missiles at U.S. military facilities in Jordan, prompting President Donald Trump to threaten further strikes against Iran. A tanker exiting the Strait of Hormuz was struck by three unidentified projectiles on Monday, according to the United Kingdom Maritime Trade Operations agency, underscoring the continued risk to commercial shipping.
Supply‑Side Factors
OPEC+ producers approved an additional production quota increase of about 188,000 barrels per day effective from September, completing the planned rollback of earlier voluntary cuts. Over the weekend, Russia announced an extension of its diesel export ban until 30 September, adding to concerns over refined fuel supplies.
U.S. Strategic Petroleum Reserve and Venezuela Deal
President Trump announced on Sunday that oil secured under a newly announced deal with Venezuela would be used to replenish the U.S. Strategic Petroleum Reserve, which had fallen to roughly 290 million barrels as of 21 August – its lowest level in 44 years after years of drawdowns. The timing and volume of any additional crude deliveries from the Venezuelan agreement remain unclear.
Contributors
The report was contributed to by Vahid Karaahmetovic.