Oil prices surged more than 3% on Monday after renewed military tensions between the United States and Iran raised fresh concerns about supply disruptions through the Strait of Hormuz.
U.S. forces struck Iranian rocket launchers near the strategic waterway, while Iran responded with missile attacks targeting U.S. bases in Jordan.
Brent and WTI Oil Prices Rally
As of 07:57 ET, Brent crude futures climbed 3.5% to $91.17 per barrel.
West Texas Intermediate crude futures rose 3.6% to $86.40 per barrel.
Both benchmarks extended earlier gains as traders reacted to the latest escalation in the Middle East.
U.S. Strikes Iranian Launchers Near Hormuz
The price rally followed a U.S. military operation on Sunday against two Iranian launchers on Larak Island.
The island is located close to the Strait of Hormuz, one of the world’s most important oil shipping routes.
The operation marked the first known U.S. strikes on Iran since late July.
A U.S. official reportedly said forces from Iran’s Islamic Revolutionary Guard Corps had been preparing to launch rockets carrying sea mines into the waterway.
Iran Retaliates Against U.S. Forces
Iran later launched missiles toward U.S. forces stationed in Jordan in apparent retaliation for the Larak Island strikes.
According to a report citing a U.S. source, nearly all incoming missiles were intercepted and no major damage had been reported.
The development nevertheless raised concerns that further exchanges of fire could follow.
Strait of Hormuz Supply Risks Return
ING analysts said the key question for oil markets is whether the latest confrontation leads to additional military strikes from both sides.
Another major concern is whether shipping companies become reluctant to move vessels through the Strait of Hormuz.
Oil producers in the region had become more confident about transporting crude through the waterway in recent weeks.
ING estimates that around 5 million barrels per day have recently been moving through the strait.
Further escalation could once again put those flows under pressure.
Oil Markets Remain Sensitive to Middle East Tensions
Oil prices have been highly sensitive to developments in the Middle East throughout the year.
Brent crude has experienced repeated swings as investors reacted to changing expectations around military escalation, ceasefire talks, and the potential normalization of shipping through the Strait of Hormuz.
Earlier this month, uncertainty surrounding progress toward a U.S.-Iran peace agreement helped push Brent to its highest closing level since late July.
Iran had maintained that the Strait of Hormuz would remain restricted unless Washington changed its approach.
U.S. Strategic Petroleum Reserve Also in Focus
Traders are also watching broader supply developments in the United States.
President Donald Trump said on Sunday that Washington would begin replenishing the Strategic Petroleum Reserve using oil obtained through a new agreement with Venezuela.
The move could influence the U.S. supply outlook, although near-term oil prices are likely to remain heavily driven by developments surrounding Iran and the Strait of Hormuz.
For now, any further escalation between Washington and Tehran could increase volatility across global energy markets and keep crude oil prices elevated.
