Oil prices extended their advance to a three-month high on Tuesday after renewed strikes on Saudi Arabian energy infrastructure heightened fears that the U.S.-Iran conflict could disrupt global crude supply for an extended period. Futures for Brent crude, the international benchmark, rose more than 2% to $99.16 a barrel, while U.S. West Texas Intermediate futures advanced to $94.46, marking the highest levels for both benchmarks since early summer.
The Saudi energy ministry confirmed that operations at certain facilities near Jazan had been halted after Iran-aligned militants struck the site, wounding dozens of workers. The attack followed a weekend in which the U.S. military struck three Iranian oil tankers after Iran launched ballistic missiles at two U.S. Navy warships, escalating a conflict that has simmered for months and repeatedly threatened to choke off traffic through the Strait of Hormuz, the corridor that carries roughly a fifth of the world's seaborne oil.
Iranian officials have continued to signal that the confrontation will not de-escalate soon. Iran's Parliament Speaker warned over the weekend that any strikes on Iranian assets would be met in kind, while U.S. defense officials have pledged to keep naval forces in the region and maintain what they describe as a blockade posture against Iranian tankers.
Goldman Sachs raised its price forecasts on Monday, lifting its year-end targets for Brent and WTI by $5 each to $85 and $80 a barrel, respectively, and pushing its 2027 forecasts higher as well. The bank said tanker rates between the Persian Gulf and China are already pricing in disruptions that could last well into next year, calling the risk of a prolonged conflict increasingly consensus among traders rather than a tail scenario.
The rise in energy prices is complicating the macro backdrop for U.S. equities just as investors were digesting last week's stronger-than-expected August jobs report, which added to the case for the Federal Reserve to proceed cautiously on further rate cuts. Higher oil prices raise the risk of renewed inflation pressure at the pump and in shipping costs, a combination that could keep the Fed on hold longer than markets had priced in over the summer.
U.S. stock futures reflected the cross-currents on Tuesday morning, with S&P 500 and Dow futures both in the red even as certain sectors, including defense and energy producers, saw early strength. Analysts said the divergence underscores how unevenly the conflict is being priced across the market: energy-sensitive and defense-adjacent names are catching a geopolitical bid, while broader consumer and rate-sensitive sectors face pressure from the prospect of stickier inflation.
Strategists cautioned that the situation remains fluid. Any sign of a diplomatic off-ramp, such as further progress on the Iran-Oman shipping protocol discussed in recent days, could quickly reverse the rally in crude. Conversely, any disruption to actual tanker traffic through Hormuz, rather than strikes on shore facilities, would likely trigger a much sharper repricing of energy and broader risk assets. For now, traders are treating the elevated oil price as a tax on growth rather than a supply shock serious enough to force emergency intervention, though several noted that the U.S. Strategic Petroleum Reserve has fallen to its lowest level since 1982, limiting Washington's options if the situation worsens.