Oil prices rose more than 2% on Monday after the United States carried out strikes on an Iranian island in the Strait of Hormuz, prompting retaliatory attacks from Tehran and renewing concerns about disruption to global energy supplies.
Brent crude futures gained $2.21, or 2.51%, to $90.31 a barrel by 0436 GMT, while US West Texas Intermediate crude rose $1.83, or 2.19%, to $85.23 per barrel.
The latest escalation came as the conflict between the United States and Iran entered its sixth month and negotiations aimed at ending the hostilities remained stalled.
US forces struck two launchers on Iran’s Larak Island in the Strait of Hormuz on Sunday, marking the first known American strikes against Iran since late July.
Iran subsequently attacked two US air bases in Jordan, Iranian media reported on Monday, citing the Islamic Revolutionary Guard Corps.
US President Donald Trump also claimed in a social media post on Sunday that Iran’s Kharg Island energy hub was being “blown to smithereens.” However, there was no independent evidence that the island had come under attack, while the post, which included an AI-generated video clip, provided no further details.
The renewed fighting has heightened concerns over the Strait of Hormuz, a critical global oil shipping route through which about one-fifth of the world’s oil supply flowed before the conflict began in late February.
Negotiations to end the conflict have reached an impasse, while mediators are working to secure the reopening of the strategic waterway.
Suvro Sarkar, head of energy research at DBS, told Reuters that the latest developments were more likely to result in a contained confrontation than a prolonged escalation.
“We see more chances of contained confrontation rather than any sustained escalation in the conflict,” Sarkar said.
He added that repeated flare-ups were continuing to delay prospects for the reopening of the Strait of Hormuz.
“We were earlier hoping that we could be back to deal negotiations for U.S.-Iran by the end of 3Q, but that is looking more unlikely now,” he said.
Sarkar projected that oil prices could remain between $85 and $95 a barrel unless there is greater clarity over the situation in the strait.
Meanwhile, shipping data showed that the number of visible commodity vessels passing through the Strait of Hormuz over the weekend fell to about five per day.
The sharp decline reflects growing caution among shipping companies amid fears that vessels could come under attack as tensions between Washington and Tehran continue to escalate.
