Global fuel prices have surged, with diesel reaching a two-year peak, as rising tensions in the Strait of Hormuz threaten oil exports from the Middle East. U.S. crude oil (WTI) jumped over 8% on Sunday evening, surpassing $72 per barrel, amid fears that the escalating conflict between the United States and Iran could severely disrupt global supply.
WTI rose $5.55, closing at $72.57 per barrel, while Brent crude gained nearly 9%, or $6.54, to reach $79.41.
Diesel and refined products lead gains
The surge has pushed refined fuel prices higher, with diesel outperforming crude due to concerns over export disruptions from Persian Gulf refineries. Diesel futures on the Intercontinental Exchange (Gasoil) rose as much as 17% at the opening of trading, marking a two-year high before partially retreating. Brent crude gains peaked at 13%. Jet fuel and heavy fuel oil also rose sharply.
The spike follows extensive U.S. and Israeli airstrikes against Iran, which resulted in the death of top Iranian leaders, including Supreme Leader Ayatollah Ali Khamenei.
Strait of Hormuz remains critical choke point
Shipping through the Strait of Hormuz has effectively frozen, with tankers unable to pass following the U.S. and Israeli strikes and retaliatory Iranian attacks. President Donald Trump indicated military operations could last “four to five weeks,” raising concerns over prolonged disruption of global oil flows.
Iran, the fourth-largest OPEC oil producer, faces internal uncertainty over leadership succession, potentially affecting exports. Analysts from UBS note that the pace of restoring navigation through the Strait and the scale of Iranian countermeasures will be decisive for oil prices in the coming days.
Market implications
Approximately 10% of global gasoil and 20% of jet fuel pass through the Strait of Hormuz, according to Kpler. Jet fuel markets have entered deeper backwardation, with immediate cargoes trading at a premium compared to future contracts. Similar trends have been observed in heavy fuel oil contracts.
U.S. military actions continue, while oil markets face heightened risk of prolonged disruption. Barclays analysts suggest Brent could hit $100 per barrel if Middle East security worsens, with UBS warning spot Brent prices may exceed $120 in a severe, sustained disruption scenario.
The global energy market is bracing for significant volatility as Iranian exports, currently around 3.3 million barrels per day, may be severely impacted.
Also read: US to use UK bases for defensive strikes against Iran
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