Crude oil futures settled higher in after-hours trading on Tuesday after the US launched fresh military strikes against Iran before reinstating the naval blockade and heightening concerns over supply disruptions even as President Trump abandoned plans for a 20% Hormuz shipping fee.
Front-month West Texas Intermediate crude futures advanced by 2.2% to $79.87 per barrel, while Brent futures rose 2.5% to $85.39/bbl.
The US military launched more airstrikes against Iran on Tuesday as it prepares to reimpose a blockade on the country's ports and coastal areas at 4 p.m. ET, US Central Command said in a social media post.
"US Central Command forces began launching an additional round of strikes against Iran to continue degrading Iranian capabilities used to attack commercial shipping in the Strait of Hormuz," US Centcom said in a post on X.
The attacks follow an announcement by Trump that he would replace the 20% protection fee for cargo transiting the Hormuz that he had floated a day ago, with trade and investment deals from Gulf countries.
"Based on highly productive conversations with Middle East leadership, I have decided to replace the 20% United States Reimbursement Fee with Trade and Investment Deals that the various Gulf States will be making into the United States," Trump said in a Truth Social post.
The reversal comes after growing opposition to Trump's proposed protection fee within the shipping industry, including from the International Maritime Organization.
Previously, Iran had demanded tolls for safe passage but agreed not to impose the fee for 60 days under the interim peace deal it signed with the US.
The security situation in the key has deteriorated over the past week as Iran has attacked commercial ships.
Vessel transits via the Strait of Hormuz continued to decline on Monday, according to MarineTraffic data, which showed a total of 10 verified crossings on July 13, down by six from the previous day.
"Low risk commercial vessels accounted for the sharpest day on day reduction, while nine of the 10 crossings used the Iranian Route," according to MarineTraffic.
TPH Energy analysts said the slowdown comes amid heightened security risks following deadly attacks on two UAE oil tankers, claimed by Iran's Islamic Revolutionary Guard Corps.
Earlier on Tuesday, the UAE said two of its tankers were struck while transiting the waterway's southern shipping lane. Adnoc Logistics & Services, the shipping arm of Adnoc, said the two oil tankers that came under attack, the Al Bahyah and Mombasa B, suffered significant damage.
Meanwhile, Yemen's Houthi rebels fired missiles at Saudi Arabia, alleging that the Gulf state had bombed an airport under the group's control on Monday.
A wider conflict with the Houthis, who have in the past targeted Red Sea shipping, could jeopardize Saudi Arabia's oil exports through its East-West Pipeline, which allows crude to bypass Hormuz, according to a Kpler note on Tuesday.