Oil prices rose more than two per cent on Monday as renewed military exchanges between the United States and Iran intensified concerns about possible disruptions to global crude supplies.
Brent crude futures advanced $2.37, or 2.69 per cent, to $90.47 a barrel, while US West Texas Intermediate gained $2, or 2.4 per cent, to $85.40 a barrel. Brent earlier touched $91.52, its highest level since 25 August, according to Oilprice.com.
Fresh Military Exchanges
The rally followed the resumption of direct military action between Washington and Tehran. US forces struck two Iranian launchers on Larak Island in the Strait of Hormuz on Sunday, the first known American attacks on Iran since late July as the conflict entered its sixth month. Iranian media reported on Monday that Iran subsequently attacked two US air bases in Jordan, citing the Islamic Revolutionary Guard Corps.
The renewed confrontation has heightened worries over the security of the Strait of Hormuz, a critical global oil shipping corridor. Markets are now assessing whether the latest escalation will broaden the conflict or whether diplomacy can secure a de-escalation and reopen the waterway.
Mediators have been seeking an agreement to reopen the Strait, through which roughly one-fifth of global oil supplies passed before hostilities began at the end of February. Negotiations have stalled amid the continuing fighting. Shipping data showed that the number of visible commodity vessels transiting the strait fell to five a day over the weekend, underscoring the disruption to maritime traffic.
Rhetoric and Sanctions
US President Donald Trump intensified comments on Sunday about Iran’s energy infrastructure, saying the country’s Kharg Island energy hub was being “blown to smithereens.” There was no independent evidence of an attack on the island. Iran denied that Kharg Island had been targeted and said oil operations there were continuing.
US Treasury Secretary Scott Bessent said on Monday that Washington’s sanctions on Iran were intended to pressure Tehran into negotiations. Speaking to CNBC, he stated that the objective was “to create the conditions that they will want to come to the table.”
Monthly Context and Venezuela Developments
Despite Monday’s recovery, oil prices remained on course for modest monthly losses in August after falling more than 4 per cent last week. That would mark the first monthly decline following three consecutive weeks of gains.
Supply concerns could be partly offset by developments involving Venezuela. Trump said on Sunday that oil secured under a deal with the South American country would be used to replenish the US Strategic Petroleum Reserve, which has fallen close to its lowest level in 44 years. Separately, Chevron, GE Vernova, India’s ONGC, Italy’s Eni and Colombia’s GeoPark are expected to sign final agreements in Venezuela after months of negotiations over energy projects in the OPEC member.
Traders continue to weigh the impact of the Iran-US conflict on crude production, exports and shipping through the Strait of Hormuz. Any prolonged disruption risks placing further upward pressure on global oil prices.
