Oil prices were trading more than 2% higher on Monday after the U.S. attacked an Iranian island in the Strait of Hormuz and drew retaliation from Tehran, as their conflict extended into its sixth month.
Brent crude futures climbed $2.21, or 2.51%, to $90.31 a barrel as of 0436 GMT while U.S. West Texas Intermediate crude was at $85.23, up $1.83, or 2.19%.
In response, Iran attacked two U.S. air bases in Jordan, Iranian media reported on Monday, citing Iran’s Revolutionary Guards.
U.S. President Donald Trump said in a brief social media post on Sunday that Iran’s energy hub of Kharg Island was being “blown to smithereens”, but there was no evidence that the island was under attack and the post, accompanied by an AI-generated clip, contained no further details.
Negotiations to end the conflict are at an impasse while mediators work to reopen the Strait of Hormuz, through which a fifth of the world’s oil flowed before the war began at the end of February.
“We see more chances of contained confrontation rather than any sustained escalation in the conflict. What continues to be impacted with every flare up are the timelines for Hormuz ‘reopening’,” said Suvro Sarkar, head of energy research at DBS.
“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. Thus, expect oil prices to remain rangebound in the $85-95 per barrel range unless more clarity emerges on the situation in the Strait of Hormuz.”
The number of visible commodity vessels that sailed through the strait over the weekend dropped to five a day, shipping data showed on Monday, reflecting caution among companies wary of attacks on ships.
The United Kingdom Maritime Trade Operations reported on Sunday that a tanker was struck by a projectile while sailing inbound through the strait on Saturday.
U.S. Treasury Secretary Scott Bessent told Reuters on Sunday that the U.S. is likely to issue new secondary sanctions weekly on Iran.
Brent and WTI are set to post small declines in August after falling more than 4% last week, in what was their first weekly decline in three.
Trump said on Sunday that oil from a recently struck deal with Venezuela will be used to replenish the U.S. Strategic Petroleum Reserve, which has dropped near its lowest level in 44 years.
#Reuters