U.S. Strikes in Iran Drive Oil Prices to Six-Week Highs
The United States military conducted strikes across Iran, killing 18 people and triggering a surge in global oil and diesel prices.
The Federal government of the United States conducted military strikes across Iran on Tuesday night, marking the most significant exchange of fire between the two nations since July. Iranian officials reported 18 deaths and 108 injuries, including three army pilots and civilians killed at a wedding ceremony near the Strait of Hormuz. These attacks are part of a broader conflict that began on February 28 with U.S. and Israeli strikes.
In response to the escalation, Iran effectively closed the Strait of Hormuz, a critical chokepoint for 20 percent of the world's oil, and expanded its list of non-compliant vessels subject to detention. Israeli Defence Minister Israel Katz warned that Israel would "cripple" Iran's military and civilian infrastructure, including energy facilities, if Tehran launched attacks.
The geopolitical tension drove Brent crude to near six-week highs of $97.29 per barrel. In the United States, diesel prices reached a record high of $5.85 per gallon, surpassing peaks seen during the 2022 Russian invasion of Ukraine. While high crack spreads led to record profits for U.S. refineries like Marathon and Valero, the supply crunch was further exacerbated by Russian bans on refined fuel exports following Ukrainian attacks on Russian refineries.
Despite the volatility, Iraq increased its oil exports to approximately 2.34 million barrels per day in August, aided by Iranian approvals for Iraqi tankers.
