Oil prices climbed to their highest levels in three weeks on Thursday, with Brent crude rising 1.3% to $92.82 a barrel and West Texas Intermediate reaching $86.75. It marked a fifth straight session of gains for both benchmarks.
The rally is being driven by the ongoing war between the U.S. and Iran, which began with American and Israeli strikes on Iran on February 28. Since then, Iran has effectively blocked the Strait of Hormuz, cutting off a waterway that previously carried around one-fifth of the world’s crude supply.
BREAKING: President Trump posts an image claiming that the Strait of Hormuz is now "new US territory."
US oil prices extend gains toward $85 per barrel. pic.twitter.com/JZvodNadlG
— The Kobeissi Letter (@KobeissiLetter) August 18, 2026
Recent shipping data shows commercial traffic through Hormuz remains at a fraction of pre-war levels, despite U.S. claims the waterway is open. Iran has denied this, and the two sides appear no closer to a resolution.
“Tensions in the Middle East remain high, leaving room for further supply disruptions,” said UBS analyst Giovanni Staunovo. “Lower oil exports from the Middle East are once again tightening the oil market.”
The UAE added pressure by suspending all financial and economic transactions with Iran until further notice. This move put more focus on the strained relationship between two of the Gulf’s biggest players.
U.S. President Donald Trump escalated his rhetoric on Wednesday, announcing what he called the “most crushing economic operation ever taken against any country.” He described it as economic warfare on an unprecedented scale and warned other nations against doing business with Iran.
BREAKING: Trump announces "the most crushing economic operation ever taken against a country" against Iran.
Trump implies the US will directly target China and Russia, saying "any country that allows its financial institutions, businesses, airports, or government entities to… pic.twitter.com/Hu3fzEyC0x
— The Hormuz Letter (@HormuzLetter) August 19, 2026
Trump did not give details on what the new restrictions would include. He also reiterated that the U.S. holds control of the Strait of Hormuz and that talks with Iran could resume “at some point.”
Iran has pushed back, saying no real dialogue has taken place. Tehran has also demanded that Washington fulfil the terms of a June memorandum of understanding before any progress can be made. That agreement lapsed earlier this week with no signs of renewal.
Hiroyuki Kikukawa, chief strategist at Nissan Securities Investment, said the market is likely to maintain a gradual upward trend given the uncertainty around peace talks and tensions involving the UAE, Oman, and Iran.
On the supply side, U.S. distillate stockpiles, which include diesel and heating oil, fell for a third straight week. Crude inventories rose by 4.4 million barrels, which was unexpected.
Emergency reserve releases by major economies, including the U.S., have helped offset some of the disruption. However, analysts expect the Middle East conflict to continue supporting crude prices in the months ahead.
The September WTI contract expired Thursday, with the more active October contract sitting at $85.52, up 1.3% on the day.
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