Brent Crude tops $95 as US-Iran tensions, Hormuz blockade drive oil rally

Crude oil prices extended their sharp rally on Wednesday as hopes of diplomatic progress between the US and Iran faded, while mounting disruptions to global oil supplies added to bullish sentiment.

Brent crude futures climbed above $95 a barrel for the first time since June 11, rising $4.43, or 4.87%, to $95.44.

Iran stated that no formal negotiations with the US are currently underway, saying only an exchange of messages remains possible, according to the Mehr news agency.

The comments followed US President Donald Trump's warning that Washington would respond if Iran-backed Houthi rebels disrupted shipping in the Red Sea. Trump also repeated threats to target Pickaxe Mountain, a site believed to be linked to Iran’s nuclear program.

Meanwhile, the US military carried out its 11th consecutive day of strikes against Iranian targets in an effort to weaken Tehran’s ability to threaten commercial shipping through the Strait of Hormuz, US Central Command said. The military added that the strategic waterway remains open despite continued Iranian actions.

Oil prices have rallied throughout the month as tensions between Washington and Tehran intensified across the Middle East. The market has also been rattled by attacks on three oil tankers near Oman in the Strait of Hormuz in recent days. Outside the region, supply concerns have been heightened by multiple attacks on the Caspian Pipeline Consortium terminal on Russia’s Black Sea coast, a key export route for Kazakhstan’s crude oil.

Key market indicators have strengthened significantly, reflecting growing concerns over supply shortages. The front-month Brent and WTI futures contracts are both trading in a bullish backwardation structure exceeding $3 per barrel, compared with only a few cents under normal market conditions.

On Tuesday, Trump claimed that Iran was "desperately" seeking talks but insisted the US had no interest in negotiations.

Tehran rejected those assertions, denying it was pursuing discussions with Washington. Oil markets have remained highly volatile as investors continue to weigh the likelihood of either further escalation or renewed diplomacy.

The threat posed by the Iran-backed Houthi rebels has also begun affecting Saudi Arabia's maritime oil exports. Several tankers slowed or paused as they approached Yemeni waters, while others carrying Saudi crude reversed course toward the Suez Canal. However, some vessels continued their scheduled routes through the region.

Late Tuesday, the Joint Maritime Information Center, a naval security monitoring organization, warned that Houthi militants had deployed missiles and drones in preparation for attacks on commercial shipping.

The Red Sea has become an increasingly important export corridor for Saudi Arabia during the conflict, enabling the kingdom to reroute part of its oil exports through pipelines and avoid the Strait of Hormuz. At the same time, commercial shipping through the narrow waterway near Iran has fallen to its lowest level in three weeks.

Analysts at Bernstein said Brent crude could climb above $100 a barrel before the end of the year if the Middle East conflict persists and oil inventories across the Organisation for Economic Co-operation and Development (OECD) continue to decline.

Goldman Sachs has also warned that crude prices could return to triple-digit levels under a severe supply disruption scenario, although the bank said that outcome is not its base-case forecast.