Oil prices surged by about three per cent on Monday, with Brent crude climbing above $90 per barrel as escalating military exchanges between the US and Iran raised fresh concerns over oil exports through the Strait of Hormuz.
Brent crude futures rose $2.77, or 3.14 per cent, to $90.87 a barrel by 0612 GMT, reaching their highest level since June 11 after recording a weekly gain of 15.9 per cent.
US West Texas Intermediate crude also advanced by $2.35, or 2.85 per cent, to $84.84 a barrel, its highest level since June 12. The benchmark had gained 15.5 per cent last week, marking its strongest weekly performance since early March.
The latest rally followed renewed military escalation over the weekend, with the US carrying out a ninth consecutive night of strikes on Iran while Kuwait and Bahrain reported fresh Iranian attacks.
Market analysts said the conflict has intensified concerns over the security of energy supplies from the Gulf region.
“ICE Brent broke above $90 per barrel this morning with no let-up in the escalation in the Gulf,” analysts at ING said.
“The US and Iran continue to exchange strikes, which are proving to be deadly for both sides. If this escalation goes unchecked, we could return to an environment of wide-scale attacks across the Gulf.”
Iran’s Islamic Revolutionary Guard Corps (IRGC) claimed on Monday that two oil tankers exploded and became stranded after attempting to pass through what it described as an unsafe southern route in the Strait of Hormuz.
The IRGC alleged that the vessels had been encouraged by the US military to use the route, although the claim has not been independently verified.
In recent days, both countries have targeted maritime activities, with the US enforcing a naval blockade on Iranian ports while Iran says it has acted against vessels it believes violated its navigation rules in the Strait of Hormuz.
The strategic waterway carries about one-fifth of the world’s oil trade, making any disruption a major concern for global energy markets.
Meanwhile, the United Kingdom Maritime Trade Operations (UKMTO) reported that a vessel caught fire northwest of Oman’s Kumzar early on Monday.
Barclays analyst Amarpreet Singh said the coming days and weeks would provide a clearer picture of how the renewed hostilities could affect oil exports from the region.
He added that oil markets may be underestimating the potential impact on global inventories, which are currently at their tightest levels in five years.
Shipping data also showed a decline in vessel movements through the Strait of Hormuz, with only four ships transiting the waterway on Sunday, compared with eight the previous day.
The data further indicated that at least three oil product tankers and one very large crude carrier have entered the strait since Friday to load crude oil.
Ojo Triumph
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