Key Takeaways
- Brent crude futures climbed $3.10, or 4.08%, to $79.11 by 0325 GMT.
- U.S. and Iranian forces launched renewed military strikes, raising concerns over oil shipments.
- The Strait of Hormuz remains under threat as global oil supply remains below pre-war levels.
Oil prices surged on Monday after the U.S. and Iran announced new military strikes that threaten energy shipments via the Strait of Hormuz. Brent crude futures rose by $3.10, or 4.08%, to $79.11 by 0325 GMT, while U.S. West Texas Intermediate crude increased by $2.95, or 4.11%, to $74.36 a barrel.
The Central Command reported that U.S. forces completed another wave of strikes against Iran on Sunday, hitting multiple locations with precision munitions. In response, the Iranian Revolutionary Guards claimed they had attacked U.S. military bases in Kuwait and Bahrain.
U.S. President Donald Trump stated that the Strait of Hormuz is open to commercial traffic, but Iran declared it closed after a vessel was struck while traveling on an unapproved route. Prior to these recent events, 20% of the world’s oil and liquefied natural gas transited the strait.
Ship-tracking data from Kpler showed that only six vessels passed through the Strait of Hormuz on Sunday, marking the lowest number in five weeks. This development casts doubt on an interim agreement signed last month between the U.S. and Iran aimed at reopening the strait and ending the ongoing conflict after 60 days of negotiations.
Following this agreement, global oil supply increased by 4.1 million barrels per day in June but remained 9.4 million bpd below pre-war levels, according to a report from the International Energy Agency. ANZ analysts noted that hopes for a quick resolution to the recent skirmishes may be in doubt after tensions escalated over the weekend.
IG market analyst Tony Sycamore observed that the relatively tame rise in oil prices suggested the market was taking the view that the current flare-up represented an escalation within a fragile truce, rather than a complete collapse of the ceasefire. However, he cautioned that the accuracy of this assessment remains to be seen.
