Oil prices moved sharply higher on Monday as renewed military clashes between the United States and Iran increased concerns over supply disruptions in the Strait of Hormuz.
The conflict has now entered its sixth month, with fresh attacks once again putting energy markets and global shipping routes under pressure.
Oil Prices Rise Nearly 2%
Brent crude futures climbed $1.77, or 2%, to $89.87 per barrel by 07:33 GMT.
U.S. West Texas Intermediate crude also advanced, rising $1.45, or 1.74%, to $84.85 per barrel.
The gains followed new military activity in the Strait of Hormuz, one of the world’s most important energy shipping routes.
U.S. Strikes Iran’s Larak Island
U.S. forces struck two launchers on Iran’s Larak Island on Sunday.
The attack marked the first known U.S. military strike on Iranian territory since late July.
Iranian media later reported that Tehran responded by targeting two U.S. air bases in Jordan, citing Iran’s Revolutionary Guards.
The renewed exchange of attacks raised fears that the conflict could once again disrupt oil exports and shipping activity across the region.
Iran Denies Attack on Kharg Island
U.S. President Donald Trump also posted on social media that Iran’s key energy hub on Kharg Island was being heavily attacked.
However, there was no independent evidence that such an assault had taken place.
The post was accompanied by an AI-generated video and did not provide additional details.
Iranian officials denied that Kharg Island had been attacked and said oil operations there were continuing normally.
Kharg Island is strategically important because it plays a major role in Iran’s oil export infrastructure.
Strait of Hormuz Remains Key Risk for Oil Markets
Diplomatic efforts to end the conflict remain stalled, while mediators continue trying to reopen the Strait of Hormuz.
Before the war began at the end of February, roughly one-fifth of the world’s oil supply moved through the waterway.
Any prolonged disruption could therefore have major consequences for global crude prices and energy supply chains.
Suvro Sarkar, head of energy research at DBS, said a contained confrontation still appears more likely than a prolonged escalation.
However, he noted that every new military flare-up delays expectations for the reopening of the Strait of Hormuz.
Oil Could Remain Between $85 and $95
Sarkar said expectations for renewed U.S.-Iran negotiations by the end of the third quarter now appear less likely.
As a result, oil prices could remain within a relatively wide trading range until there is more clarity over the situation in the Strait of Hormuz.
He suggested that crude could trade between roughly $85 and $95 per barrel unless the geopolitical situation changes significantly.
Shipping Through Hormuz Drops Sharply
Shipping activity through the strait has also fallen considerably.
Data showed that only around five visible commodity vessels per day passed through the waterway over the weekend.
The decline reflected growing caution among shipping companies concerned about possible attacks on vessels.
The United Kingdom Maritime Trade Operations also reported that a tanker was struck by a projectile while entering the Strait of Hormuz on Saturday.
U.S. Plans More Iran Sanctions
Economic pressure on Iran is also expected to increase.
U.S. Treasury Secretary Scott Bessent said Washington is likely to introduce additional secondary sanctions against Iran on a weekly basis.
The combination of military pressure and tighter sanctions could further complicate efforts to restart negotiations between Washington and Tehran.
Brent and WTI Head for Monthly Declines
Despite Monday’s gains, both Brent and WTI were still on track to post modest losses for August.
Oil prices fell more than 4% last week, marking their first weekly decline in three weeks.
That decline came before the latest escalation in U.S.-Iran tensions revived concerns over supply risks.
U.S. Strategic Petroleum Reserve Back in Focus
Trump also said on Sunday that crude oil from a recently announced agreement with Venezuela would be used to replenish the U.S. Strategic Petroleum Reserve.
The reserve has fallen close to its lowest level in 44 years.
For now, oil markets remain highly sensitive to developments involving Iran, the Strait of Hormuz and future U.S. military or sanctions policy.
Any further escalation could quickly increase volatility in Brent and WTI prices.
