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Update: WTI Oil Extends Rally as US-Iran Fighting Threatens Persian Gulf Supply

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(Updates prices in the second paragraph.)

West Texas Intermediate (WTI) crude oil rose for a second day on Tuesday as renewed fighting between the US and Iran again threatens to keep Persian Gulf supply off the market.

WTI crude oil for August delivery closed up $1.20, or 1.5%, to settle at $79.34 per barrel, the highest since June 15, while September Brent oil was last seen up $1.34, or 1.6%, to $84.64.

Oil is now up 11% in the past two days after Iran and the US renewed fighting on the weekend as they dispute control over the Strait of Hormuz, the chokepoint for 20% of daily oil demand supplied by Persian Gulf nations prior to the Feb. 28 start to the war.

Iran attacked three tankers in the Strait and launched strikes against US targets in neighboring countries overnight, the Wall Street Journal reported, while the US carried out five hours of strikes on Iranian targets and re-imposed a blockade of Iranian ports.

Iran has again declared the Strait closed, while the US President Trump on Monday said it remains open while announcing plans to impose a 20% toll on shipping through the waterway as a protection fee.

The fighting has again kept shipping through the Strait limited, with hormuzstraitmonitor.com reporting just 11 ships have move through the waterway in the past 24 hours, under the daily average of 60 ships.

"Oil prices jumped almost 10% on Monday - their biggest one-day gain in more than three months - after President Trump reinstated the blockade on Iran and demanded a 20% toll on all cargo passing through the Strait of Hormuz. Brent extended its advance during the Asian session, rising a further 1.1% to USD 85 per barrel for the first time in a month, supported by short covering from wrong-footed traders and renewed concerns over Persian Gulf supply," Saxo Bank wrote.

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