Brent crude is holding close to $95 a barrel on Wednesday after fresh fighting between the United States and Iran renewed concerns that the conflict could disrupt the movement of oil from the Middle East to the rest of the world.
Brent, the global benchmark for oil prices, briefly climbed above $97 a barrel before easing to around $94.68. The price is now about 13% higher than it was a month ago and more than 40% above its level a year earlier.
The latest increase follows a sharp escalation on Tuesday, when the United States launched fresh strikes against Iranian targets around the Strait of Hormuz. Washington said the strikes were retaliation for Iran’s attempts to lay mines in the waterway and an earlier attack on a US military base.
Iran has since responded by targeting US positions in the region and firing missiles towards Jordan. US President Donald Trump has also warned of a much larger response if Tehran retaliates again.
For people outside the oil market, the importance of the latest developments comes down to one place: the Strait of Hormuz.
The narrow waterway sits between Iran and Oman and is one of the main routes through which oil from the Middle East reaches international markets. Millions of barrels pass through it every day, supplying countries across Asia, Europe and elsewhere.
That means even the possibility of the route being disrupted can push oil prices higher.
Traders do not have to wait for oil supplies to actually disappear before prices react. If ships become afraid to use the route, if tankers are attacked, or if Iran restricts passage through the strait, the amount of oil reaching international buyers could fall.
That is the risk markets are now pricing in following the latest US-Iran exchanges.
There is, however, an important sign that oil is still moving.
US Treasury Secretary Scott Bessent said about 17 million barrels of crude passed through the Strait of Hormuz on Monday. That suggests that, despite the military escalation, large quantities of oil are still getting through.
This is why the market has not seen an even larger jump in prices.
For now, the concern is less about an immediate shortage of oil and more about what could happen if the conflict escalates further.
If ships continue to move through Hormuz without major disruption, some of the recent increase in oil prices could ease. But if attacks on shipping intensify or the waterway becomes significantly harder to use, the consequences could be much larger.
Higher oil prices would not remain confined to the oil market.
Crude is a basic input into transportation and many parts of the global economy. A prolonged rise in prices can therefore increase the cost of fuel, transport and production, adding pressure to inflation in countries that import much of their energy.
For now, however, the market is waiting to see whether the latest US-Iran escalation remains largely a military confrontation or begins to interfere materially with the movement of oil.
That distinction could determine where Brent goes next after its latest climb towards $95 a barrel.
