Crude prices traded above $100 a barrel on Tuesday morning as Iran intensified attacks on energy infrastructure across the Gulf, leaving markets concerned about the fragility of supply routes.
Brent crude (BZ=F) futures rose 4.2% to $104 a barrel, while West Texas Intermediate (CL=F) climbed 5% to $96.90 at the time of writing.
Brent remains below its recent peak of $119.50, reached after the outbreak of war, but is still up almost 50% from pre-conflict levels.
The latest escalation came as Iraqi Shia militias aligned with Tehran launched further strikes overnight.
The US embassy in Baghdad was targeted by multiple drones and rockets. The Al-Rasheed Hotel in Baghdad’s Green Zone, which houses several diplomatic missions including Saudi Arabia and the EU, was also hit.
Read more: Top oil and energy stocks to watch as crude swings wildly amid Iran war
Despite the attacks, Iraq’s oil minister said Baghdad is in contact with Iran to allow some oil tankers to pass through the Strait of Hormuz, according to the state news agency.
Jim Reid, an analyst at Deutsche Bank, said expectations that shipping could resume had “helped to ease fears about a wider stagflationary shock”, supporting equities and limiting oil price gains.
“The sun has shone a little brighter on markets over the last 24 hours, with oil prices stabilising as hopes mounted for a resumption of oil flows through the Strait of Hormuz,” he said.
“This morning both have reversed most of yesterday’s losses but the moves in oil have been small so far this week which has helped provide a little calm.”
Download the Yahoo Finance app, available for Apple and Android.