Oil prices rose more than 1% today after US forces struck Iranian launchers on Larak island in the Strait of Hormuz, with the resulting retaliation from Tehran renewing concerns over disruption to a vital global oil route.
Brent crude futures gained US$1.08, or 1.23%, to US$89.18 a barrel by 0040 GMT, while US West Texas Intermediate crude rose 92 cents, or 1.10%, to US$84.32.
The US strikes on Sunday were the first known American attacks on Iran since late July. Iran’s Revolutionary Guards said the country responded by attacking two US air bases in Jordan, according to Iranian state media.
The escalation comes as negotiations to end the conflict remain stalled. At the same time, mediators continue efforts to reopen the Strait of Hormuz. Before the war began in late February, the waterway carried around a fifth of global oil supplies, making any prolonged disruption a major risk for energy markets.
“Looks like we are in another escalation phase. How long that lasts is impossible to determine. Could be days, could be weeks,” said Tony Sycamore, an IG market analyst.
Shipping activity through the strait has so far helped limit fears of a severe supply shock, but signs of growing caution among operators are emerging. The number of visible commodity vessels crossing the waterway fell to five a day over the weekend, while the UK Maritime Trade Operations reported that a tanker was struck by a projectile while travelling inbound on Saturday.
Reuters reported that continued oil flows through the strait had helped keep supply disruption concerns in check, although the latest decline in shipping traffic points to increasing risks if the conflict intensifies.
Despite Monday’s gains, Brent and WTI remain on course for modest monthly declines after falling more than 4% last week, their first weekly losses in three weeks.
Meanwhile, US President Donald Trump said on Sunday that oil from a recently reached deal with Venezuela would be used to replenish the US Strategic Petroleum Reserve, which has fallen close to its lowest level in 44 years.
