Brent crude climbed above $82 as the Hormuz risk premium surged across global markets. Traders reacted to the intensifying conflict involving Iran, Israel, and the United States. As a result, oil benchmarks extended recent gains.
Brent futures rose $1.17, or 1.4 percent, to reach $82.57 per barrel. The contract closed at its highest level since January 2025. Meanwhile, US West Texas Intermediate gained 72 cents, or 1 percent, to hit $75.28 per barrel.
Both benchmarks advanced around 5 percent over the past two sessions. The Hormuz risk premium surges because investors fear supply disruption. Geopolitical tensions now outweigh traditional price drivers.
Market analysts said geopolitics has overtaken inventory data and economic indicators. Export flows from the Gulf remain the key focus. Therefore, traders monitor tanker movements and military signals closely.
Israeli and US forces struck targets inside Iran, escalating tensions sharply. Iran responded with attacks on energy infrastructure across the region. The Middle East produces just under one-third of the global oil supply.
The Strait of Hormuz handles about 20 percent of global oil and liquefied natural gas flows. Reports indicate tanker traffic remains effectively halted. Consequently, the Hormuz risk premium surges further.
In response, President Donald Trump said the US Navy could escort oil tankers if needed. He also directed the US International Development Finance Corporation to provide political risk insurance for maritime trade. These measures aim to stabilize shipping confidence.
However, war-risk insurers have started canceling coverage for vessels in the region. Shipping costs have risen sharply as uncertainty spreads. Analysts believe naval escorts may help, but implementation requires time.
Iraq, the second-largest producer in OPEC, reduced output by nearly 1.5 million barrels per day. Officials warned that storage limits and blocked exports may force a shutdown of nearly 3 million barrels per day soon. Therefore, supply risk continues to support higher prices.
Asian buyers also search for alternative supplies. India and Indonesia seek new energy sources. Some Chinese refineries have accelerated maintenance schedules to manage uncertainty.
Meanwhile, US crude inventories increased by 5.6 million barrels last week. Analysts had projected only a 2.3 million barrel rise. Despite higher stocks, the Hormuz risk premium surges due to conflict concerns.
Energy markets now hinge on Gulf export data and military developments. Traders expect continued volatility until safe navigation resumes. For now, geopolitical tension drives the oil rally.