Oil prices swung sharply on Tuesday as uncertainty over shipments through the Strait of Hormuz unsettled global markets. Associated Press market data showed benchmark Brent crude briefly rising above $90 a barrel, dropping below $87 and then settling at $88.91, a gain of 1.4% from Monday. The rapid reversal highlighted how sensitive energy prices remain to developments in the conflict involving the United States, Israel and Iran.
The disruption began after the United States and Israel attacked Iran in late February and Iran threatened shipping, effectively closing the strait. The route normally carries a major share of global petroleum trade. The U.S. Energy Information Administration has said Persian Gulf producers have partly offset the constraint by redirecting supplies, while releases from strategic reserves and increased production outside the Middle East have also moderated prices.
U.S. Energy Secretary Chris Wright said nearly 9 million barrels a day were moving through the strait and that regional flows, including pipelines, averaged roughly 15 million barrels daily. AP reported that the U.S. strategic petroleum reserve fell below 300 million barrels last week, more than 100 million barrels lower than at the start of 2026. Iran, however, continued to link a full reopening to its conditions, leaving traders without a clear timetable.
The volatility extended beyond crude. The S&P 500 fell 0.3% for its second modest decline since Friday's record, the Dow Jones Industrial Average lost 184 points or 0.3%, and the Nasdaq composite dropped 0.6%. Brent had already ranged between $72 and $102 during July, illustrating the unusually wide band in which supply headlines have pushed prices.
Consumers and monetary policymakers face a direct impact. AAA put the average U.S. price of regular gasoline at $4.01 a gallon, up from less than $3.14 a year earlier but below nearly $4.09 the previous week. Economists surveyed ahead of Wednesday's inflation report expected annual inflation to ease to 3.4% in July from 3.5% in June, although expensive energy can slow that improvement.
Bond markets also reflected the uncertainty. The 10-year Treasury yield eased to 4.69% from 4.72% late Monday but remained far above its 3.97% pre-war level. CME Group data indicated traders saw roughly even odds of a Federal Reserve rate increase in September, which would be the first in more than three years. The next inflation reading and evidence on Gulf shipments are therefore likely to guide the next move in oil, borrowing costs and equities.
Comments