Crude oil futures settled higher in after-hours trading on Tuesday as the round of strikes on ships and Middle East energy infrastructure, including reported explosions at Iran's vital export hub Kharg Island, stoked fears of fresh supply tightness.
Front-month West Texas Intermediate futures gained 2.7% to $93.09 per barrel, while Brent futures climbed 2% to $97.01/bbl.
ING strategists said on Monday that the oil market remains well-supported with little sign of peace between the US and Iran.
On Tuesday, the US military reportedly struck targets near Kharg Island and the port city of Jask, said in a post on X that the targets included Iranian oil tankers and characterized it as part of a broader effort to force Tehran to capitulate.
Fueling bullish sentiment, Saudi Arabia's Foreign Affairs Ministry said Yemen's Houthis targeted civilian and economic assets in the cities of Abha, Khamis Mushait, Jazan and Najran. More than 70 civilians were injured in the attacks, the ministry said.
The ministry said that the attacks caused fires at several energy facilities, resulting in temporary shutdowns, and emergency services are working to contain fires at the sites.
The Houthis, in a statement, said that they targeted Saudi Aramco facilities in southern areas with drones and ballistic missiles.
Iran's Islamic Revolution Guards Corps said on Tuesday that Iranian forces remain firmly in control of the Strait of Hormuz. The IRGC also said that it intercepted and captured an unmanned American submarine at the entrance of the strait.
President Trump said on Monday that oil prices would fall sharply once the US wins its war with Iran, predicting US gasoline prices could eventually drop below $2 per gallon.
"Oil prices will drop precipitously" after the war, Trump said in a post on Truth Social. The US President forecasted that gasoline prices would fall to $3 per gallon and ultimately below $2, adding that the decline would happen quickly.
Tempering the gains, Iranian Foreign Minister Abbas Araghchi said "significant progress" has been made in talks with Oman over a temporary transit route through the Hormuz.
Esmail Baghaei, spokesman for Iran's Foreign Ministry, said on Monday that the agreement, which the two countries have been negotiating for several weeks, is in the final stages and will include details on a temporary safe route through the strategic waterway.
Bjarne Schieldrop, chief commodities analyst at SEB Research, said that the Iran-Oman agreement over how to operate the SoH is just days away from finalization says Iran. The IMO and the US are said to have been involved in the process, Schieldrop said.