Brent crude oil rose above $90 a barrel on Monday, extending sharp gains from the previous week as escalating hostilities between the United States and Iran raised concerns over oil shipments through the Strait of Hormuz.
Brent crude futures climbed $2.09, or 2.37%, to $90.19 a barrel by 0241 GMT, reaching their highest level since June 11. The benchmark had already surged 15.9% last week, marking its biggest weekly gain since April.
US West Texas Intermediate crude also advanced, rising $1.71, or 2.07%, to $84.20 a barrel, its highest level since June 12. WTI prices gained 15.5% last week, the strongest weekly increase since early March.
The latest rally followed a further escalation in the Middle East conflict over the weekend. The United States carried out a ninth consecutive night of strikes against Iran, while Kuwait and Bahrain, both US allies, reported additional Iranian attacks.
Analysts said the continued exchange of strikes between Washington and Tehran was increasing fears of broader instability across the Gulf region, where a significant share of the world’s oil exports passes through narrow maritime routes.
“ICE Brent broke above $90 per barrel this morning with no let-up in the escalation in the Gulf,” ING analysts said in a note. “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 said on Monday that two oil tankers had exploded and become immobilised after attempting to transit what it described as an unsafe southern route through the Strait of Hormuz. Iranian media alleged the vessels had been encouraged by the US military to use the passage, although Reuters said it could not immediately verify the incident.
The Strait of Hormuz is one of the world’s most important energy chokepoints, handling roughly one-fifth of global oil trade. Disruption to traffic through the strait has heightened fears of supply shortages and tighter inventories.
The United States has said it is enforcing a naval blockade on Iranian ports, while Iran has stated that it is targeting vessels it says violate its rules for navigating the strait.
The United Kingdom Maritime Trade Operations agency reported early on Monday that a vessel was on fire northwest of Oman’s Kumzar, adding to concerns over maritime security in the area.
LSEG shipping data showed that only four vessels transited the Strait of Hormuz on Sunday, down from eight the previous day. The data also indicated that at least three oil products tankers and one Very Large Crude Carrier had entered the strait since Friday to load oil.
Barclays analyst Amarpreet Singh said markets may still be underestimating the potential impact on global inventories. “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,” he said.
