Oil prices jump again on Tuesday as concerns intensified over the security of the Strait of Hormuz, with several countries resisting Donald Trump’s call for international support and Iran continuing attacks on oil-producing neighbors.
The gains partly reversed Monday’s sharp drop, which followed remarks from Fatih Birol of the International Energy Agency, who said additional strategic reserves could be released if necessary.
Meanwhile, stock markets extended their rally, driven in part by optimism in the tech sector after Nvidia projected it could generate at least $1 trillion in revenue by the end of 2027.
Investors are also watching a series of upcoming central bank decisions, with analysts warning that rising oil prices could push policymakers toward resuming interest rate hikes to counter inflation.
Trump urged European and other allies to help secure the Strait of Hormuz effectively shut by Iran stating the effort should be shared. However, the response has been muted.
German Chancellor Friedrich Merz said the conflict triggered by US-Israeli strikes on Iran was not a NATO issue, while countries including Britain, Spain, Poland, Greece, Sweden, Australia, and Japan declined to participate.
The US president told The Financial Times on Sunday that it would be "very bad for the future of NATO" if the allies refused to help, and said Monday that he had asked to delay a summit with Chinese leader Xi Jinping by a "month or so" over the issue.
With tensions showing no signs of easing, benchmark crude prices rose more than 2%, hovering around $100 per barrel. This followed Monday’s decline after the IEA announced a record release of 400 million barrels from strategic reserves.
Hostilities in the Middle East continued to escalate. Drone strikes targeted major oil fields in the United Arab Emirates and Iraq, while Israel launched large-scale attacks in Tehran and against Hezbollah positions in Beirut. A separate drone and rocket strike also hit the US embassy in Baghdad early Tuesday.
Despite the surge in oil prices, global equities remained resilient. Markets across Asia rose, supported by Nvidia’s outlook. South Korea led gains, fueled by strong performances from chipmakers, while Tokyo, Hong Kong, Shanghai, Sydney, Singapore, Taipei, and Manila also advanced.
Wall Street had already closed higher across all three major indexes.
Pepperstone's Chris Weston noted that confidence in a sustained rally is limited, warning that recent developments do not yet signal a clear de-escalation or a lasting reduction in energy-related risks.
