U.S. crude oil hits two-month high, tops $84 per barrel amid war and hurricane fears

Environment

An oil pump jack is shown in a field in Stanton, Texas, on June 27, 2024.
Brandon Bell | Getty Images News | Getty Images

U.S. crude oil topped $84 per barrel on Tuesday, hitting a two-month high as worries grow that a war between Israel and Hezbollah and an active hurricane season in the Gulf of Mexico could disrupt supplies.

As oil extends its rally, gasoline prices have hit a $3.50 per gallon average ahead of the Fourth of July holiday, according to the motorist association AAA. Prices at the pump are 3 cents higher than last week but still lower than last month.

Here are today’s energy prices:

  • West Texas Intermediate August contract: $84.28 per barrel, up 90 cents, or 1.03%. Year to date, U.S. crude oil has gained 17.6%.
  • Brent September contract: $87.35 per barrel, up 75 cents, or 0.75%. Year to date, the global benchmark is ahead by 13.4%.
  • RBOB Gasoline August contract: $2.61 per gallon, up 1.35%. Year to date, gasoline has advanced 24.27%.
  • Natural Gas August contract: $2.44 per thousand cubic feet, down 1.25%. Year to date, gas is down 2.8%.

Oil prices gained 6% last month after sagging in May as geopolitical risk entered the market again. Eighteen Israeli soldiers were injured Sunday in a drone attack launched by the Iran-backed militia Hezbollah, according to the Israel Defense Forces.

Israel and Hezbollah have exchanged fire across the Lebanon border for months, but tensions have escalated in recent weeks as the two sides have threatened war. An Israeli invasion of Lebanon to push back Hezbollah could lead to a confrontation with OPEC-member Iran, analysts have warned.

Traders also worry that an early and active hurricane season could disrupt refineries and oil production along the U.S. Gulf Coast. Hurricane Beryl has strengthened into a Category 5 storm after making landfall on Grenada’s Carriacou Island.

Beryl is unlikely to disrupt oil infrastructure but may point to a difficult hurricane season, according to Bob Yawger, executive director of energy futures at Mizuho Securities.

“The size and timing on the calendar are reason for concern,” Yawger told clients in a Monday note. Gasoline prices would increase if a hurricane hits refinery facilities along the Gulf Coast, while oil would trade lower as unused barrels pile up, Yawger said.

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