Oil prices rose on Tuesday amid growing fears that the Iran-Israel conflict could escalate, raising the risk of unrest and possible supply disruptions in the Middle East.
Brent crude futures climbed 34 cents, or 0.5%, to $73.57 a barrel by 3:40 UTC. U.S. West Texas Intermediate crude added 29 cents, or 0.4%, to $72.06. Earlier in the session, both benchmarks had gained more than 2%, according to Reuters.
On Monday, oil prices fell by more than 1% after reports said Iran wanted to end the fighting.
However, worries returned when U.S. President Donald Trump urged all residents to leave Tehran, accusing Iran’s government of rejecting a deal to curb its nuclear work.
“Everyone should evacuate Tehran,” Trump wrote on his Truth Social, tying his warning to what he called Iran’s refusal to agree to nuclear limits.
At the Group of Seven summit in Canada, leaders urged both sides to calm down. They branded Iran a source of regional instability, said it must never gain a nuclear weapon, and affirmed Israel’s right to defend itself. French President Emmanuel Macron had suggested the U.S. put forward a ceasefire plan, but Trump denied that in another Truth Social post. “Wrong! … it certainly has nothing to do with a Cease Fire. Much bigger than that.”
As the war entered its fifth day on Tuesday, Iranian outlets reported blasts and intense air-defense activity in Tehran. In Israel, air raid sirens wailed in Tel Aviv in response to Iranian missile launches.
Traders stay focused on Iran-Israel tensions
Priyanka Sachdeva, a senior market analyst at Phillip Nova, emailed Reuters to say that the conflict is weighing on investor sentiment, with traders mindful of war risks. She also said that “added volatility and caution ahead of the Fed policy decision are further ensuring higher-paced price reactions in oil.”
The U.S. Federal Open Market Committee meeting, which guides interest-rate choices, starts Tuesday. It will wrap up on Wednesday with a rate decision watched by markets.
Iran is OPEC’s third-largest oil producer. Traders worry the fighting could cut its output and drive prices up. OPEC has warned that a supply shock could have global effects.
Late Monday, U.S. outlets reported that Trump was proposing new talks with Iran over a nuclear pact. At the same time, other reports of a shipping incident in the Gulf of Oman underlined the risks for companies moving oil and fuel through the region.
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