Oil Prices Spike Near Six-Week High as US-Iran Clashes Escalate in Strait of Hormuz

Global oil prices surged to near six-week highs on Monday, driven by intensified military exchanges between the United States and Iran in the Strait of Hormuz. Brent crude futures hovered around $97 a barrel, reflecting a 9 percent increase over five days and a 19 percent jump month-over-month. This level approaches the peak of $97.93 recorded on July 24. West Texas Intermediate crude also rose, reaching $92.27 a barrel, marking another near six-week high.

The strategic waterway, through which approximately 20 percent of the world’s oil passes during peacetime, has seen escalating violence. On Saturday, the US struck three Iranian oil tankers, while Iran’s Islamic Revolutionary Guard Corps (IRGC) reported attacks on three tankers and three vessels linked to the US in separate locations.

Rachel Ziemba, an adjunct senior fellow at the Center for a New American Security, noted that the continued conflict is sustaining global supply deficits. “There is little end to these shortages,” Ziemba told Al Jazeera. Compounding the disruption, Saudi Aramco’s Jizan facilities were hit for the second time in a month, potentially delaying the refinery’s return to production.

Data from analytics platform Kpler indicates that traffic through the Strait has dropped to an average of just 10 commodity ships per day over the last ten days. Arif Gasilov, a partner at the Gasilov Group, described the market volatility as cyclical, driven by weekend exchanges and the recent attack on Aramco facilities.

The price surge is heavily impacting American consumers. According to the American Automobile Association (AAA), the national average for a gallon of petrol rose 7 cents in a single week to $4.15 on Monday. This marks a 39 percent increase since the conflict began on February 28, when prices stood at $2.98. Diesel prices have also reached record levels, topping $5.90 per gallon last week.

Patrick De Haan, head of petroleum analysis at GasBuddy, warned that record diesel prices would begin to filter through the broader economy. Research from Brown University’s Watson School of International and Public Affairs estimates that US households have spent an additional $418.82 on fuel since the war began, totaling an extra $100 billion nationally.

These economic pressures are emerging as a critical factor ahead of the US midterm elections. A recent Financial Times poll revealed that President Donald Trump’s economic approval rating has dropped to a new low, with only 17 percent of Americans approving of his handling of the economy. An Economist/YouGov poll further indicated that 39 percent of voters believe Democrats manage the economy better, compared to 32 percent who favor Republicans.

In contrast, China has moved to insulate itself from the disruptions. John Gong, an economics professor at the University of International Business and Economics, stated that Beijing has successfully managed the situation by leveraging domestic resources and its strategic petroleum reserve. He highlighted that Russia supplies nearly half of China’s daily oil needs and noted that over 50 percent of cars sold in China are now electric, reducing reliance on imported fuels.