Oil prices rose by more than 2% on Monday after fresh military exchanges between the United States and Iran heightened concerns about the security of energy shipments through the Strait of Hormuz, one of the world’s most important oil transit routes.
Brent crude futures increased by $1.67, or 2.2%, to $77.68 a barrel during morning trading. US West Texas Intermediate crude gained $1.59, or 2.23%, to reach $73.00 a barrel as traders reacted to growing geopolitical risks in the Gulf.
The latest price gains followed a weekend of military action that renewed fears of supply disruptions. Iran launched attacks on US facilities across the Gulf on Sunday and announced it had once again closed the Strait of Hormuz. On Monday, Iran’s Revolutionary Guards said they had carried out additional strikes against US military bases in Kuwait and Bahrain.
Before fighting erupted in late February, the Strait of Hormuz handled roughly one-fifth of the world’s daily oil and liquefied natural gas shipments, making any disruption to traffic through the waterway a major concern for global energy markets.
UBS analyst Giovanni Staunovo said market attention remains focused on the number of oil tankers entering the Gulf, warning that reduced vessel movements could affect production levels.
“The focus will remain on the number of inbound tankers as a lower number could impact production, so currently we see a risk premium but as well a disruption risk supporting prices,” Staunovo said.
Analysts at ANZ also pointed to growing caution among shipping companies as security concerns increased across the region. Ship-tracking data showed vessel traffic through the Strait of Hormuz fell to a five-week low on Sunday, with Kpler reporting that only six vessels passed through the strategic waterway that day.
The renewed conflict has also raised uncertainty over the future of the interim agreement signed by Washington and Tehran last month. The deal was intended to reopen the strait and provide a 60-day window for negotiations aimed at ending the conflict.
US President Donald Trump said on Sunday that commercial shipping was continuing through the Strait of Hormuz despite Iran’s announcement that it had closed the passage after a vessel reportedly travelled along an unauthorised route and was struck.
Goldman Sachs said the Middle East’s expanding pipeline network could reduce future risks by allowing more crude exports to bypass the Strait of Hormuz. The bank estimates that effective bypass capacity could exceed 14 million barrels per day by the end of 2028.
Meanwhile, Iranian crude inventories stored at sea have increased after exports rose during the temporary peace agreement with the United States. Demand has remained subdued, however, as China’s independent refiners shifted purchases toward lower-priced oil from Iraq, the United Arab Emirates and Qatar.
In another development affecting global energy markets, Ukraine’s Security Service said it carried out overnight strikes on an oil depot in Russia’s Stavropol region and hit three storage tanks at an oil-loading terminal in the southern Russian port of Kavkaz, adding another layer of uncertainty to the international oil supply outlook.
