Oil prices surged by 3% on Monday, with Brent exceeding $90 a barrel, as the United States and Iran intensified their military actions in the Middle East, leading to a reduction in energy shipments through the Strait of Hormuz. Brent crude futures increased by $2.69, representing a 3.05% rise, reaching $90.79 by 2343. This marks the highest level since June 11, continuing the upward trend after a significant 15.9% increase last week, which was the largest weekly gain since April. U.S. West Texas Intermediate crude reached $84.68 a barrel, reflecting an increase of $2.19, or 2.65%, marking the highest level since June 12.
Front-month prices experienced a notable increase of 15.5% last week, marking the most significant weekly rise since early March. The Middle East conflict intensified over the weekend as the U.S. executed a ninth consecutive night of assaults on Iran, while U.S. allies Kuwait and Bahrain reported an increase in Iranian strikes. In recent days, both parties have focused their efforts on shipping traffic. The United States has asserted that it is implementing a naval blockade on Iranian ports, while Iran has claimed it is targeting vessels that contravene its regulations regarding navigation in the Strait of Hormuz, a critical passage that typically manages one-fifth of the global oil trade.
A vessel was ablaze to the northwest of Kumzar, Oman, as reported by the United Kingdom Maritime Trade Operations agency early on Monday. “The coming days and weeks will provide a clearer picture of the sustainable level of oil exports from the region under renewed dual blockades,” analyst Amarpreet Singh said in a note. “As things stand, we think 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.”
On Sunday, four vessels transited the Strait of Hormuz, a decrease from eight the prior day, according to LSEG data. Since Friday, at least three oil products tankers and one Very Large Crude Carrier have entered the strait to load oil, according to the data.