Oil prices climb to $85 as US-Iran attacks intensify, Hormuz traffic stalls
Brent crude traded at $85.02 a barrel at 11:44 a.m. EDT, up 2.06% from Monday's close after reaching $87.39 earlier on Tuesday.
Oil prices continued to climb on Tuesday as the US and Iran exchanged fresh attacks and tensions escalated over control of the Strait of Hormuz.
What happened: Brent crude, the international benchmark, traded at $85.02 a barrel at 11:44 a.m. EDT, up 2.06% from Monday's close after reaching $87.39 earlier on Tuesday. The gains came as attacks on shipping in the Strait of Hormuz continued and vessel traffic through the waterway slowed to a near standstill.
US Central Command said it conducted another round of overnight strikes aimed at "further degrading Iran's ability to attack commercial shipping." Iran responded with missile strikes targeting US military bases in Bahrain and Jordan.
On Monday, the United Arab Emirates accused Iran of carrying out a "brazen" attack on two Emirati tankers in the Strait of Hormuz, killing one person and injuring eight.
In a post on X, the UAE Ministry of Defense condemned the attack as a "serious violation and a clear breach of international law" that threatened regional security, adding that the UAE "reserves its full right to respond" and protect its people.
On Monday, the number of tankers transiting the Strait of Hormuz hit a two-month low, according to shipping data from analytics firm Kpler, as vessels steered clear of the key waterway over security concerns.
President Donald Trump said Monday on Truth Social that the US would impose a second blockade of the Strait of Hormuz, through which roughly one-fifth of global oil and liquefied natural gas shipments passed before the conflict. Trump also proposed charging ships a fee equal to 20% of the value of their cargo for safe passage, drawing criticism from the shipping industry.
Trump backed away from the proposal on Tuesday, saying he would instead seek increased Gulf investment in the United States.
“Based on highly productive conversations with Middle East leadership, I have decided to replace the 20% United States Reimbursement Fee with Trade and Investment Deals that the various Gulf States will be making into the United States," he said.
Why it matters: The latest escalation marks another reversal for oil markets after a brief period of relative calm. Brent crude peaked near $115 a barrel in early May as fears mounted over prolonged supply disruptions, before retreating after an April ceasefire and falling further following the June 17 interim agreement between Washington and Tehran that temporarily reopened the Strait of Hormuz and eased concerns over global energy supplies. Renewed fighting since July 7 — triggered by attacks on three tankers and subsequent US airstrikes on Iranian targets — has once again driven ships away from the waterway and pushed oil prices higher.
Iranian Oil Minister Mohsen Paknejad said Tuesday that the country's oil exports were continuing "as normal" despite the United States ending a sanctions waiver and reinstating a naval blockade of Iranian ports.
"Iran's oil exports are continuing without interruption despite the termination of a 60-day exemption tied to US sanctions," Paknejad said, according to the Oil Ministry's Shana news agency.
He added that Iran has spent years developing mechanisms to circumvent US sanctions and would maintain exports at pre-blockade levels.
Know more: Iran exported more than 80 million barrels of crude oil and petroleum products in the 26 days following the signing of the MoU on June 17 before hostilities reignited, according to TankerTrackers, a website that monitors oil tanker movements.
