Crude spikes as US-Iran exchange fire, ceasefire under strain in Hormuz

Global oil prices remained elevated on Tuesday after a sharp surge, as renewed military confrontation between the United States and Iran reignited fears of supply disruptions through the Strait of Hormuz.

Brent crude settled at $114.06 a barrel, up 5.45 per cent, while US West Texas Intermediate (WTI) traded near $105.02, down 1.32 per cent in early trade after crossing the $105 mark at the open. The slight pullback in US crude reflected profit-taking and cautious reassessment after a sharp rally.

The spike follows a dramatic escalation in tensions across West Asia, with the US and Iran exchanging fire and targeting energy infrastructure and commercial shipping.

Iranian strikes hit multiple vessels and triggered a blaze at a key oil terminal in Fujairah in the United Arab Emirates.

The United States has moved to secure maritime routes, with its military escorting vessels through the Strait of Hormuz. US Central Command said American forces are actively working to restore safe commercial navigation through the chokepoint, through which roughly one-fifth of global oil supply passes.

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In a sign of tentative stabilisation, a US-flagged vessel operated by Danish shipping major Maersk successfully transited the strait under US military protection, easing immediate fears of a complete supply freeze.

The latest flare-up marks the most significant escalation since a four-week ceasefire between Washington and Tehran, now increasingly fragile.

Iran’s retaliation reportedly followed a new US operation aimed at reopening the strait to commercial traffic, intensifying the conflict and injecting fresh volatility into energy markets.

Oil prices had surged more than 6 per cent in the previous session as traders priced in the risk of prolonged disruption. Brent and WTI both climbed to multi-month highs amid concerns that sustained attacks could choke supply routes and tighten global markets.

Despite Tuesday’s marginal dip in US crude, market sentiment remains firmly risk-driven. Traders are balancing signs of partial resumption in shipping against the broader threat of escalation, which could further disrupt flows and push prices higher.