Brent crude oil prices broke above $90 per barrel on Monday, climbing 3.14% to $90.87 as escalating hostilities between the United States and Iran choked off shipments through the Strait of Hormuz and raised fears of a prolonged supply crisis. The global benchmark extended last week’s 15.9% surge, its largest weekly gain since April, while US West Texas Intermediate crude rose 2.85% to $84.84, also hitting its highest level since mid June. The rally came after a weekend of intensified violence that saw the US conduct its ninth consecutive night of strikes against Iran, while Tehran’s Revolutionary Guards claimed two oil tankers exploded after hitting mines in the southern strait and announced they had “stopped” four other vessels attempting transit.
The tanker incidents have become a flashpoint in the economic warfare surrounding the military conflict. Iran’s Islamic Revolutionary Guard Corps said the two vessels were “deceived by American intelligence agencies” into entering a mined corridor, a claim US Central Command dismissed as “false.” The Guards declared the strait “unsafe and completely closed,” warning that no oil, gas, or chemical fertilizer exports would pass until US attacks ended. Four vessels transited on Sunday, down from eight the day before, according to LSEG data. Before the war began on February 28, roughly 20 million barrels of oil, a fifth of global demand, passed through the waterway daily. The UK Maritime Trade Operations reported a vessel on fire northwest of Oman’s Kumzar on Monday, though the cause was unverified. Kuwait condemned an Iranian strike on one of its power generation and water desalination plants as a direct assault on civilian infrastructure.
Analysts warn that markets may still be underestimating the fallout. “ICE Brent broke above $90 per barrel this morning with no let up in the escalation in the Gulf,” analysts noted. “If this escalation goes unchecked, we could return to an environment of wide scale attacks across the Gulf.” Barclays analyst Amarpreet Singh cautioned that oil markets are “still too complacent about the potential fallout for inventories, which, unlike at the beginning of the war, are at the tightest of the past five years.” Brent has now surged roughly 30% from its July lows since the interim peace agreement collapsed, the US resumed its blockade of Iranian ports, and Tehran intensified attacks on shipping. With both sides targeting commercial traffic, Washington enforcing its naval blockade and Iran hitting vessels it claims violate its navigation rules, the strait that handles one fifth of global oil trade remains effectively militarized, and the premium built into crude prices shows no sign of easing.
