Global oil prices rose on Monday as renewed military exchanges between the United States and Iran raised fresh concerns over energy supplies passing through the Strait of Hormuz, despite both countries agreeing to resume diplomatic talks.
Brent crude futures gained 58 cents, or 0.8%, to reach $72.57 a barrel in early trading, while US West Texas Intermediate (WTI) crude climbed 88 cents, or 1.3%, to $70.11 a barrel.
The gains followed several days of military strikes exchanged by Washington and Tehran that disrupted shipping through the Strait of Hormuz, one of the world’s most important energy routes. The latest incidents highlighted the fragile nature of the interim peace agreement reached between the two countries.
Market analysts said traders remain concerned about the outlook for global oil supplies, even though shipping activity had shown signs of improvement before the latest escalation.
Analysts at ING said investors appeared to be focusing on the prospect of oil exports gradually returning to normal levels, although risks to the market remain significant.
They warned that if supply recovery proves slower than expected, oil prices could face further upward pressure.
Brent crude had dropped 10.6% last week, marking its third consecutive weekly decline, after crude shipments through the Strait of Hormuz reached their highest level since the conflict involving the United States, Israel and Iran began in late February.
That recovery in shipping slowed again after renewed attacks on vessels in the waterway beginning on Thursday, including an incident involving a Qatar-linked oil tanker. The attacks prompted another round of military action by both Washington and Tehran, creating the most serious confrontation since the interim peace deal was signed.
Oil prices were prevented from rising more sharply after a US official confirmed on Sunday that the United States and Iran had agreed to halt recent military actions in the Gulf and resume negotiations over security and navigation in the Strait of Hormuz.
Analysts at ANZ said the market is likely to reassess expectations that oil supplies from the Persian Gulf will return to normal quickly. They noted that ongoing logistical challenges continue to affect production and exports.
Saudi energy giant Aramco resumed crude loading operations on Friday at its Ras Tanura export terminal after nearly four months of disruption. The restart came as producers increased output and exports ahead of the interim agreement.
Loading operations continued despite a helicopter crash at the Ras Tanura facility on Sunday that killed 14 people. Authorities have not yet announced the cause of the accident.
ANZ analysts said damaged infrastructure, tanker congestion and production shutdowns continue to restrict physical oil flows, adding that global supplies may not fully recover to pre-conflict levels until later this year.
