Oil prices continued to rise on Monday as new strikes by the U.S. and Iran on vessels in and around the Strait of Hormuz heightened concerns about a sustained disruption to oil supplies from the Middle East. The most recent escalation occurred on Saturday, as U.S. forces targeted three Iranian oil tankers, as reported by U.S. Central Command. One of the vessels was struck off the coast of Kharg Island, adjacent to Iran’s critical oil export hub. Brent crude futures increased by 52 cents, representing a 0.54% rise, reaching $96.80 per barrel. Meanwhile, U.S. West Texas Intermediate crude saw an uptick of 66 cents, or 0.72%, bringing it to $92.14 per barrel. The gains followed a significant rally last week, with Brent increasing by 8% and WTI rising nearly 10% as renewed U.S.-Iran attacks interrupted oil flows through the Strait of Hormuz, a critical passage for a fifth of the global oil supply.

The Islamic Revolutionary Guard Corps navy of Iran announced that it had engaged three oil tankers navigating through unauthorised routes in the Strait of Hormuz, in addition to three other U.S. vessels located in different regions. The effects on shipping via the strategic waterway are already manifesting. An average of 10 commodity ships crossed the Strait of Hormuz each day over the past 10 days, marking the lowest level since May, according to a report. Mohsen Rezaei, the secretary of Iran’s Supreme National Security Council, stated on Sunday via state media that a restricted zone is set to be declared outside the Strait of Hormuz in the near future. The length of the disruption will be pivotal for oil prices. JPMorgan projects that each additional month of disruption may contribute approximately $7 to $8 per barrel to Brent prices.

If the disruption persists for three months, the bank anticipates average monthly Brent prices to approximate $114 per barrel. Goldman Sachs has issued a cautionary note indicating that Brent may rise to $120 a barrel should shipping disruptions persist through the Strait of Hormuz, which is recognised as the most critical oil transit route globally. Its base case, however, posits that tensions in the Middle East will ultimately subside. The bank anticipates that Brent will average $80 a barrel in the fourth quarter and $75 a barrel in the following year, while also noting that the risks are skewed to the upside should disruptions in the Strait of Hormuz and the Red Sea persist longer than anticipated.

Citi has adjusted its average Brent crude price forecast for the third quarter to $86 a barrel, up from $80, attributing this revision to a longer-than-anticipated timeline for the reopening of the Strait of Hormuz. Analysts have raised their short-term Brent forecast to $95 a barrel, cautioning that prices may escalate further should the conflict in the Middle East intensify. It was indicated that a prolonged standoff characterised by measured military engagement between the U.S. and Iran seems to be the most probable outcome, potentially postponing the restoration of complete Middle East supply.