Crude Oil Prices Surge as US-Iran Escalation Puts Strait of Hormuz Recovery at Risk

LONDON: Crude oil prices rose by more than $1 a barrel on Monday after US forces struck an Iranian island in the Strait of Hormuz and Iran retaliated, renewing concerns over oil supplies and commercial shipping through the strategically vital waterway.

Brent crude futures gained $1.08, or 1.23%, to reach $89.18 a barrel at 0040 GMT, while US West Texas Intermediate crude rose 92 cents, or 1.10%, to $84.32.

The latest escalation came after US forces struck two Iranian launchers on Larak Island in the Strait of Hormuz on Sunday. The strikes were the first known US attacks on Iran since late July.

A US official said the launchers were reportedly being prepared to fire rockets carrying sea mines into the waterway.

Iran subsequently retaliated by targeting two US air bases in Jordan, Iranian media reported, citing the Islamic Revolutionary Guard Corps.

Hormuz Disruption Raises Fresh Oil Supply Concerns

Market analysts said the latest exchange of attacks had introduced another phase of uncertainty for global energy markets.

“Looks like we are in another escalation phase,” IG market analyst Tony Sycamore said, adding that the duration of the escalation remained unclear.

The developments come as oil markets had begun anticipating a gradual recovery in commercial activity through the Strait of Hormuz. However, negotiations aimed at ending the conflict remain stalled, while diplomatic efforts continue to restore regular shipping through the strategic waterway.

The Strait of Hormuz connects the oil-producing Gulf states with international markets and is one of the world’s most important energy chokepoints. Before the conflict began in late February, around one-fifth of global oil supplies passed through the strait.

Commercial Shipping Remains Under Pressure

Shipping activity through the waterway has remained subdued amid continuing security concerns.

Shipping data showed that the number of visible commodity vessels crossing the strait fell to around five per day over the weekend. The actual number could be higher because some vessels have reportedly switched off their automatic identification systems.

The United Kingdom Maritime Trade Operations also reported that a tanker was struck by a projectile while travelling inbound through the strait on Saturday.

Analysts at ANZ said increases in oil flows through Hormuz had previously helped contain concerns about supply disruptions, but the latest military escalation could reverse that trend.

A prolonged disruption to shipping could once again place pressure on crude supplies and raise the risk of higher global energy prices.

Oil Prices Face Further Upside Risk

Market analysts are also monitoring technical levels for signs of further gains.

According to Sycamore, a sustained move by WTI above the $85.80-$85.90 resistance range could open the way towards $87.69, followed by the July high of $93.50.

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

The market is also watching measures aimed at cushioning potential supply disruptions. US President Donald Trump said oil from a recently reached agreement with Venezuela would be used to replenish the US Strategic Petroleum Reserve, which is near its lowest level in decades.

The latest surge highlights the sensitivity of global oil markets to developments around the Strait of Hormuz, where even a limited escalation can rapidly revive concerns over the security of a critical global energy corridor.