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US Oil Update: Crude Rallies After US Hits IRGC Targets, Tanker Attacks Stoke Supply Fears

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Crude oil futures settled higher by over 5% in after-hours trading on Tuesday as the US military launched fresh attacks on Islamic Revolutionary Guard Corps targets in Iran and attacks on tankers stoked concerns over potential disruptions in the Strait of Hormuz.

Front-month West Texas Intermediate crude rose by 5.7% to $90.68 per barrel, while Brent futures climbed 5.2% to $95.18/bbl.

The US launched a fresh wave of strikes against targets in Iran on Tuesday, extending a back-and-forth of fighting with neither side prepared to cede control over the Strait of Hormuz.

"Today at 12 p.m. ET, U.S. forces began striking Islamic Revolutionary Guard Corps (IRGC) targets in Iran," the US Central Command said in a social media post on Tuesday.

Centcom said the strikes followed attempted IRGC attacks on commercial shipping in the Hormuz and US service members.

President Trump described the strikes as "large and powerful" in a Truth Social post on Tuesday, saying they were retaliation for Iran's attempt to add sea mines to the Strait of Hormuz and its missile attack on a US base in Jordan.

"The strikes are large and powerful, and in retaliation for the Iranians' failed attempt at adding sea mines to the Strait, which currently has no mines...," the US President said in a post on Truth Social.

Trump also threatened a significantly larger response if Tehran retaliates, saying Iran would be hit "at a much harder and higher level" and warning that an even bigger attack was "waiting in the wings."

Iran's state-owned IRIB reported that several explosions were heard east of Bandar Abbas and around Qeshm island.

IRGC spokesperson Sardar Mohebi said in a post on X that the US will regret its latest attacks. "Severe punishment awaits the aggressors...," Mohebi said.

Fueling bullish sentiment, the UK Maritime Trade Operations Center said that a tanker was struck by three unknown projectiles while transiting Hormuz on Monday. The maritime security agency said the tanker was sailing in the southern shipping lane near the Omani coast.

The UKMTO also said that it had received a report of an incident involving a tanker and military forces in the Indian Ocean, off the Omani coast.

Gelber & Associates said the two supertankers carrying Saudi crude each carried about 2 million barrels. The analysts said that the near-simultaneous attacks raised doubts about the safety of the Omani corridor being used to move barrels through the disrupted waterway.

On the supply side, commercial shipping through the strategic waterway plunged by half at the end of August, the latest data from Kpler showed on Tuesday, with five confirmed vessel crossings on Aug. 31, down from 10 a day earlier. Four vessels entered the Middle East Gulf while one exited.

Going forward, Soojin Kim, a research analyst at MUFG, said that persistent geopolitical tensions and tanker attacks are likely to keep a risk premium embedded in oil prices, with Gulf producers' ability to maintain exports remaining the key factor.

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