Brent climbs 2.1% to $86 as US-Iran escalation threatens Red Sea and Hormuz

Brent crude futures climbed $1.77, or 2.1%, to $86 a barrel by 1158 GMT on Friday, while US West Texas Intermediate (WTI) rose $1.91, or 2.4%, to $80.86. Both benchmarks have gained roughly 13% this week, with Brent set for a third consecutive weekly rise and WTI for a second. Reuters reported the move as tensions escalated between the United States and Iran in the Gulf.

The driver is shipping risk, not a supply cut yet. A truce between the US and Iran has broken down, and Iran has urged the Houthi movement to block the Red Sea route in retaliation for any US strikes on its power infrastructure. Bloomberg reported that fears over the Strait of Hormuz are pushing prices higher, with Iran conducting new attacks on US facilities in the region. Diesel is where the strain shows fastest: low-sulphur gasoil futures hit a record $66.25 over Brent, because the Middle East is a major diesel exporter and any Hormuz disruption tightens the fuel globally.

The chart below shows Brent over the recent period, against which this week's 13% run and the latest $86 print can be read.

What this means for UK buyers

Oil does not set your gas or power price directly, but it feeds the same risk premium. When crude runs 13% in a week on supply-security fears, gas-linked forward curves tend to firm alongside it, and diesel-exposed operations feel it first. If your renewal falls in the next quarter, the curve you are quoting against is moving under you.

The points worth tracking through the escalation:

• Brent front-month ($86 and rising on the week)
• WTI front-month ($80.86, up 2.4%)
• Low-sulphur gasoil crack (record $66.25 over Brent)
• Any confirmed closure of the Strait of Bab al-Mandab
• Redirected Saudi flows away from Hormuz into the Red Sea

The Financial Times reported that transit through the Red Sea has surged since the conflict began, as Saudi exports were routed away from Hormuz. Commerzbank analysts noted that a blockade of Bab al-Mandab on further escalation would push oil higher still. Fatih Birol, Executive Director of the International Energy Agency, said oil security remains a crucial concern and that he is worried if the situation does not improve in the coming weeks.

What to watch next is whether the shipping threat becomes an actual closure. If either chokepoint is blocked, the premium currently priced as risk converts to a physical supply shock, and both crude and gas-linked power curves would steepen further. For buyers holding open renewal decisions, the volatility itself is the signal to fix your tender timeline rather than wait for a settled price.