Following further attacks by the United States, Iran expanded its military strikes to Gulf states, creating fears about the security of energy exports through the Strait of Hormuz. As a result, oil prices increased by more than 4% on Monday. Brent crude futures increased by $3.34, representing a 4.38% rise, reaching $79.5 per barrel. Meanwhile, U.S. West Texas Intermediate crude saw an uptick of $3.07, or 4.30%, bringing it to $74.20 per barrel. The recent rally follows a 5.5% increase in both benchmarks last week, with WTI trading above $74 a barrel once again. European natural gas futures increased by 2.5% as markets resumed trading after the weekend. Over the weekend, Tehran broadened its military operations to include Qatar and the United Arab Emirates, while the United States executed another series of strikes against Iran. This development signifies the latest intensification in the ongoing cycle of retaliatory actions associated with maritime activities in the Strait of Hormuz.

The U.S. Central Command announced that it initiated new strikes at 5 PM Eastern Time on Sunday, asserting that the operation was intended to hold Iran accountable for its assaults on commercial vessels transiting through the strait. The recent increase in crude prices follows a period during which oil had relinquished all its gains stemming from the Iran conflict, subsequent to the signing of a memorandum of understanding between the United States and Iran at the G7 summit in France last month. The agreement encompassed stipulations aimed at resolving the conflict and guaranteeing the secure transit of commercial vessels through the Strait of Hormuz. The recent escalation poses a risk to initiatives aimed at replenishing diminished global oil inventories later this year, as indicated by the International Energy Agency’s statement released on Friday, prior to the most recent wave of attacks.

U.S. President Donald Trump stated on Sunday that the Strait of Hormuz continues to be accessible for commercial traffic. Iran, however, previously announced the closure of the waterway following an incident in which a vessel navigating what it termed an unauthorised route was hit. The recent escalation has further obscured the prospects of the interim agreement reached between the United States and Iran last month, which aimed to facilitate the reopening of the strait and conclude the conflict following an additional 60 days of negotiations. According to the International Energy Agency’s monthly report released on Friday, global oil supply experienced an increase of 4.1 million barrels per day in June subsequent to the agreement. Nonetheless, production continued to lag at 9.4 million barrels per day beneath pre-war levels. Analysts indicated that the market continues to exhibit signs of tension. Nuvama Institutional Equities indicated that an extended closure of the Strait of Hormuz could impede approximately 20 million barrels per day of crude oil transportation. In this context, oil prices may rise to a range of $110 to $150 per barrel.

“The latest developments have effectively thrown the future of the 60-day negotiation process into doubt,” Bjarne Schieldrop told. “In my view, a price closer to $80 a barrel is more consistent with current market fundamentals than $70,” he added. Last month, Saudi Aramco Chief Executive Officer Amin Nasser cautioned that any extended disruption in the Strait of Hormuz could delay the restoration of stability in global oil markets until 2027. He stated that a prolonged disruption could impact almost 100 million barrels of oil supply on a weekly basis. Saudi Aramco stands as the preeminent oil producer globally. Industry experts contend that the resumption of normal shipping activity through the Strait of Hormuz is improbable in the near term. Restoring operations necessitates coordinated vessel movements, the resumption of oil production, repairs to damaged infrastructure, and agreements on de-mining efforts. Numerous shipowners continue to exhibit reluctance in resuming operations in the Strait of Hormuz and the broader Persian Gulf.