Oil prices climbed on Tuesday after reports that the US military had attacked targets on Iran’s Qeshm Island, near the entrance to the Strait of Hormuz. Brent crude traded at $106 a barrel, up about 1.3% from Monday, recovering part of the nearly 8% drop recorded at the start of the week. US military officials said the strikes targeted the island; similar attacks may have taken place earlier but were not made public at the time.
The previous day, President Donald Trump said he was not considering another attack on Iran before the US midterm elections. He described the subsequent fall in oil prices on Truth Social as dropping “like a rock.”
Goldman Sachs raised its year-end Brent forecast for the third time in a short period, from $90 to $105 a barrel. The bank’s analysts cited a high risk of supply disruptions arising from conflicts in the Middle East and between Russia and Ukraine. Their earlier forecasts had been $80 and then $85 a barrel.
US fuel prices have remained elevated despite Trump’s efforts to bring them down ahead of the elections. The average price was recently $4.14 a gallon for gasoline and $6.28 for diesel. Frank Schallenberger, an oil analyst at Landesbank Hessen-Thüringen, said a US deal with Russia on diesel imports had likely made little difference to prices, which had mainly tracked shifts in tensions in the Gulf region.
Schallenberger said the election could also affect energy costs. If Democrats perform well, Trump could face greater opposition to continuing the war with Iran, potentially increasing the chances of an end to the conflict. In that scenario, he said, the Strait of Hormuz might become fully navigable again, boosting oil supply and easing pressure on the market for oil products.
In Germany, heating oil cost about €172 per 100 litres on Tuesday, according to the Heizoel 24 website, compared with €93 a year earlier—an increase of 85%. Super E10 averaged €2.07 per litre on Monday, while diesel averaged €2.28. A temporary fuel-tax subsidy had made petrol and diesel somewhat cheaper, and Germany had fallen to seventh place in Europe for Super E10 prices and ninth for diesel, according to the Automobile Club of Germany.
Sources: FAZ.