(BRUSSELS, BELGIUM) – Oil prices rose sharply on Monday as renewed military action between the United States and Iran placed fresh pressure on shipping through the Strait of Hormuz, a vital channel for global energy supplies.
Brent crude futures added 3.10 US dollars, or 4.08 percent, to reach 79.11 dollars per barrel. West Texas Intermediate, the American benchmark, gained 2.95 dollars, or 4.11 percent, to settle at 74.36 dollars per barrel. In British pounds, Brent traded at roughly 62.40 pounds and WTI at approximately 58.65 pounds, based on current exchange rates.
The increase follows a weekend of intensified strikes and counter strikes. US Central Command confirmed that American forces carried out precision strikes on dozens of targets across multiple locations in Iran on Sunday. Iran’s Islamic Revolutionary Guard Corps said on Monday that it had attacked US military bases in Kuwait and Bahrain. These exchanges have clouded the outlook for energy shipments through the Strait of Hormuz, the narrow waterway between the Persian Gulf and the Gulf of Oman through which a large share of the world’s seaborne oil passes.
Shipping data from Kpler showed that only six vessels transited the strait on Sunday, the lowest number recorded in five weeks. The reduction in traffic points to growing caution among commercial operators in the face of the military activity. The drop in crossings came despite a statement by US President Donald Trump on Sunday that the strait remained open for commercial shipping. That assurance was challenged by Iran’s earlier declaration that it had closed the strait after a vessel travelling an unauthorised route came under attack.
The renewed violence has cast doubt on the temporary agreement reached between the United States and Iran last month. That deal was designed to reopen the strait and halt hostilities, followed by a 60 day period of further talks. Analysts at ANZ noted that hopes for a fairly quick resolution may now be in question after tensions rose over the weekend. Market analyst Tony Sycamore of IG said the relatively modest increase in crude prices suggested that traders currently view the escalation as part of a fragile truce rather than a full collapse of the ceasefire. He added that how accurate this view proves to be remains to be seen.
The International Energy Agency, in its monthly report published on Friday, indicated that global oil supply rose by 4.1 million barrels per day in June following the US Iran agreement. Despite that increase, supply levels remained 9.4 million barrels per day below pre war volumes.
The latest developments follow a rise in oil prices on Friday, when markets first reacted to renewed fears of Middle East supply disruption and restricted shipping through the Strait of Hormuz. As the situation develops, the energy market is closely watching whether the fragile truce can be restored or whether further military action will lead to sustained constraints on a route that is central to the flow of crude to global markets.
Be First to Comment