Oil prices climbed toward $90 per barrel on Tuesday, driven by rising geopolitical tensions in the Middle East and concerns over potential disruptions to global supply.
Brent crude futures, the global benchmark, were up 0.7% at $89.80 per barrel by 08:30 GMT, nearing levels last seen in early May. U.S. West Texas Intermediate (WTI) crude also rose 0.6% to $87.20 per barrel. The gains reflect heightened risk premiums as regional instability threatens key shipping routes and production facilities.
Analysts cited the escalation of conflicts involving Israel and Iran-backed groups, alongside broader Middle Eastern instability, as primary drivers of the upward price momentum. The Red Sea and Strait of Hormuz, critical chokepoints for oil transit, remain focal points of concern. Any sustained disruption in these areas could significantly tighten global oil supply.
The geopolitical premium was further supported by OPEC+'s recent production cuts, which have tightened the market despite weaker demand forecasts. The cartel and its allies, including Russia, have maintained voluntary output reductions totaling 2.2 million barrels per day through 2024, aimed at stabilizing prices amid fluctuating demand.
Investors are also monitoring U.S. inventory data, with the American Petroleum Institute (API) reporting a surprise drawdown of 1.9 million barrels last week. While official government figures from the Energy Information Administration (EIA) are pending, the preliminary data adds to supply-side bullishness.
The rise in oil prices comes as central banks, including the Federal Reserve, weigh the impact of energy costs on inflation. Higher oil prices could delay expected monetary easing cycles, particularly in economies sensitive to energy prices such as the eurozone and emerging markets.
Market participants remain cautious, noting that prices could fluctuate sharply depending on developments in the Middle East. Any direct confrontation involving major oil producers could trigger a more pronounced supply shock.
