Crude oil prices jump to one-month high after 10% rally as US-Iran war escalates; Brent oil near $85 a barrel

US-Iran war: Oil prices climbed around 2% on Tuesday, 14 July, reaching their highest level in four weeks, after the United States reinstated its naval blockade of Iran and both nations intensified attacks around the Strait of Hormuz, raising concerns over global energy supplies.

Brent crude futures gained $1.68, or 2%, to $84.98 per barrel, while US West Texas Intermediate (WTI) crude advanced $1.65, or 2.1%, to $79.79 per barrel. In the previous session, Brent had surged 9.6%, marking its biggest single-day jump since May 2020.

Oil prices have climbed to their highest levels since the two countries signed a memorandum of understanding on June 17 to end the conflict.

According to the UAE Ministry of Defence, two United Arab Emirates tankers were struck by Iranian cruise missiles in the southern shipping lane of the Strait of Hormuz, within Omani territorial waters, on Monday. The attack claimed the life of one Indian crew member and injured eight others.

Separately, US President Donald Trump said the United States had reimposed its blockade of Iranian shipping. He also stated that Washington expects to be compensated for safeguarding countries that rely on its protection in the Strait of Hormuz.

Oil prices have climbed to their highest level in nearly a month, recovering part of the roughly 30% decline recorded in the second quarter, as the escalating conflict has renewed concerns over crude supplies from the Persian Gulf.

During a brief pause between two US naval blockades, Iran exported at least 57 million barrels of crude, underscoring the significance of its oil shipments to the global market as restrictions are once again tightened.

The Joint Maritime Information Center announced that the US Central Command will start enforcing a blockade on all Iranian ports and coastal areas from 4 p.m. New York time on Tuesday. US President Donald Trump said the operation's costs would be reimbursed by countries benefiting from the protection of the Strait of Hormuz, including Saudi Arabia, the UAE, Qatar, Bahrain and Kuwait.

According to Iran's semi-official Fars news agency, citing an army statement, Iranian forces launched drones at US assets in Kuwait and fired cruise missiles at what it described as a "hostile vessel." Meanwhile, the UAE reported that two of its oil tankers were attacked in Omani waters while travelling through the southern route of the Strait of Hormuz.

Earlier on Monday, Tehran said its agreement with Washington had "clearly entered a crisis phase" and declared it would no longer honour the deal as long as the US continued to violate its commitments. Iranian Foreign Minister Abbas Araghchi also ridiculed Trump's proposal to impose a toll on ships using the strait.

In recent weeks, Gulf oil producers had started increasing crude exports after an interim agreement eased concerns over shipments. The UAE, in particular, successfully boosted exports by deploying shuttle tankers that operated with their tracking transponders switched off.

The UAE also informed OPEC that its crude oil production rose to 3.8 million barrels per day in June from 1.71 million barrels per day in May, according to a monthly report reviewed by Bloomberg. The increase came after the country found ways to navigate disruptions caused by the Iran conflict and ramped up production following its exit from the producer group.

Separately, Trump is expected to back a Russian sanctions bill championed by the late Senator Lindsey Graham, White House official was quoted as saying by Bloomberg. The legislation would revive efforts to penalise buyers of Russian oil and natural gas, increasing pressure on the Kremlin to bring an end to the war in Ukraine.

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Vaamanaa covers business and stock market news. Started in 2020, she has been producing news on digital platforms for over 4.5 years now. She writes ...