Oil prices surged on Monday following a weekend of escalating military strikes between the United States and Iran, intensifying the contest for control over the Strait of Hormuz. As of Monday, Brent crude futures climbed 3.08% to $78.35 per barrel, while U.S. West Texas Intermediate crude rose 3.09% to $73.62. These increases followed a sharp rally on Sunday evening, when U.S. crude futures were up 4.1% and Brent futures traded 3.88% higher.
Military Escalation and Conflicting Claims
The recent violence marks the fourth time in a week that the U.S. has conducted airstrikes against Iran in retaliation for attacks on commercial vessels. According to U.S. Central Command (Centcom), the U.S. military launched a new wave of strikes on Sunday following an operation that hit 140 targets on Saturday. These actions were prompted by an attack by the Islamic Revolutionary Guard Corps on a container ship transiting the strait. In response, Iran launched strikes against U.S. military facilities in Jordan, Kuwait, Bahrain, and Oman, according to the state news agency Tasnim. Iranian state media claimed the Revolutionary Guard had closed the Strait of Hormuz until further notice. However, the U.S. military and President Donald Trump have disputed this, asserting that the waterway remains open. “U.S. forces are positioned and prepared to ensure that freedom of navigation remains available despite unwarranted Iranian aggression, harassment, threats, and arbitrary declarations,” Centcom stated in a social media post. “Iran does not control the strait. Traffic is flowing.”
For more on this story, see U.S.-Iran Airstrikes Spark Oil Surge, Threaten Strait of Hormuz Stability.
Strait of Hormuz Security Status
While officials maintain the strait is open, the security environment is described as severe. The Joint Maritime Information Center, a U.S.-led naval coalition based in Bahrain, has advised mariners to exercise “extreme vigilance.” Shipping data reflects the tension. On Sunday, six vessels transited the strait, the lowest number recorded in five weeks. This follows a period where traffic had begun to recover after an interim peace deal was signed on June 17. The current conflict stems from differing interpretations between Washington and Tehran regarding how the strait was intended to reopen under that agreement. Iran has demanded that vessels utilize a northern route through its territorial waters, claiming control over the corridor. Conversely, the U.S.-led coalition continues to monitor the southern route through Oman’s waters, which remains open to traffic.
This follows our earlier report, Satellite Images Reveal Extent of Damage to Iranian Nuclear and Military Sites.
Energy Market Implications
The instability threatens global energy supplies, as approximately 20% of the world’s oil transited the Strait of Hormuz prior to the outbreak of hostilities earlier this year. According to the International Energy Agency, while global oil supply rose by 4.1 million barrels per day in June following the interim peace deal, levels remained 9.4 million barrels per day below pre-war figures. Market analysts are divided on the long-term impact of the latest skirmishes. While some observers, such as those at ANZ, noted that hopes for a quick resolution are in doubt, others suggest the market is reacting with caution. IG market analyst Tony Sycamore noted that the current price increases may reflect a view that the escalation is taking place within a “fragile truce” rather than representing a complete collapse of the ceasefire, though he cautioned that the accuracy of that assessment remains to be seen.
Read also: Leaked US-Iran Memorandum Strains Trump Administration.
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