Oil Jumps 7% as US-Iran Confrontations Resume

Oil prices rose last Friday, ending the week with strong gains after the United States and Iran resumed military strikes in the seventh month of their conflict, while U.S. consumer diesel prices hit a record high.

Brent crude futures settled up 76 cents, or 0.8%, at $92.68 a barrel, while U.S. West Texas Intermediate (WTI) crude futures closed up 18 cents, or 0.20%, at $91.48 a barrel. Over the week, Brent crude rose 7.6%, while U.S. crude increased by about 10%, as supply routes in the Middle East continued to be affected by the war, according to Reuters.

Rising oil prices, coupled with sharper increases in fuel costs, have pushed up inflation rates and government borrowing costs worldwide, alongside growing warnings that the global economy could slow unless some de-escalation occurs.

U.S. diesel prices have reached unprecedented highs due to supply disruptions stemming from renewed hostilities between the United States and Iran, as well as Ukrainian attacks on Russian refineries. According to AAA data, the average price of a gallon of diesel in the United States is now $5.85, and prices could rise further due to sharp declines in inventory and the onset of harvest and planting seasons in agricultural regions across the country.

Citigroup raised its forecast for the Brent crude average for the third quarter from $80 to $86 a barrel, stating that reopening the strait would take longer than previously expected. ANZ analysts raised their short-term forecast for Brent crude to $95 a barrel, citing risks that could push prices higher if the conflict in the Middle East intensifies.

The U.S. economy added 162,000 jobs in August, dispelling concerns about a weak labor market, but reinforcing expectations that the Federal Reserve (the U.S. central bank) will raise interest rates later in September.