A Kuwaiti oil tanker carrying two million barrels of oil caught fire after it was hit by an Iranian drone off Dubai, an attack that underscored the war’s deepening risks to the energy sector.
Oil prices remained volatile, rising early Tuesday before falling back to just above $110 a barrel on a Wall Street Journal report that US President Donald Trump told aides that he was willing to end the month-long conflict even if the Strait of Hormuz remained largely closed. Hours earlier, Trump hailed “great progress” in talks to end the war but also threatened that the US would “obliterate” Iran’s Kharg Island oil export hub if Tehran did not reopen the strait.
Meanwhile, the cost of the conflict is rippling through the US economy as average petrol prices rose above $4 a gallon for the first time since August 2022, though Federal Reserve Chair Jerome Powell said longer-term inflation expectations were “well anchored.” The global impacts have been more severe: Inflation is accelerating in Europe, with the EU’s energy chief urging Europeans to consider traveling less; South Korea is weighing imposing driving restrictions; and fuel shortages are hitting petrol stations across Africa.