Oil prices surge over 2% as US-Iran tensions escalate in Strait of Hormuz

Brent crude futures rose $2.51, or 2.85%, to $90.61 per barrel, while US West Texas Intermediate (WTI) gained $2.13, or 2.55%, to reach $85.53 a barrel

ISLAMABAD: Global oil prices jumped more than 2% on Monday after the United States carried out strikes on Iran’s Larak Island in the Strait of Hormuz, triggering fresh retaliation from Tehran and intensifying concerns over crude supplies.

Brent crude futures rose $2.51, or 2.85%, to $90.61 per barrel, while US West Texas Intermediate (WTI) gained $2.13, or 2.55%, to reach $85.53 a barrel.

The latest escalation came after US forces struck two launchers on Larak Island on Sunday. The attack marked the first known American strikes on Iranian territory in the Gulf since late July.

Iran subsequently launched attacks on two US military bases in Jordan, according to Iranian media reports citing the Islamic Revolutionary Guard Corps.

Market analysts warned that the renewed confrontation could push crude prices higher if tensions continue to intensify. IG market analyst Tony Sycamore said the market appeared to be entering another escalation phase, although the duration remained uncertain.

Technical indicators suggest that a sustained move by WTI above the $85.80-$85.90 resistance range could pave the way for further gains, with $87.69 and then $93.50 emerging as potential targets.

The conflict has also raised fresh concerns about the Strait of Hormuz, a crucial global energy route through which roughly one-fifth of the world’s oil previously passed before the conflict began in late February.

Efforts to negotiate an end to the conflict remain stalled, while mediators are working to restore normal shipping through the strategic waterway.

US Treasury Secretary Scott Bessent said Washington was likely to impose additional secondary sanctions on Iran on a weekly basis, with the aim of further restricting Tehran’s access to the dollar-based financial system.

Despite Monday’s rally, both Brent and WTI remained on track for modest monthly declines in August after crude prices fell more than 4% last week.

Analysts at ANZ said continued oil flows through the Strait had so far helped ease some fears of a major supply disruption. However, shipping data showed that visible commodity vessel traffic through the waterway fell to around five vessels a day over the weekend, reflecting growing caution among shipping companies.

The United Kingdom Maritime Trade Operations also reported that a tanker was hit by a projectile while travelling inbound through the Strait on Saturday, adding to concerns over the safety of commercial shipping.

Meanwhile, US President Donald Trump said oil secured through a recently announced deal with Venezuela would be used to replenish the US Strategic Petroleum Reserve, which has fallen close to its lowest level in more than four decades.