Oil prices rose nearly 2% on Monday after the United States attacked an Iranian island in the Strait of Hormuz and drew retaliation from Tehran, extending a conflict now in its sixth month, Reuters reported.
Brent crude futures climbed $1.77, or 2%, to $89.87 a barrel by 0733 GMT, while US West Texas Intermediate crude rose $1.45, or 1.74%, to $84.85, according to Reuters.
Strikes on Larak Island
US forces struck two launchers on Iran's Larak Island in the Strait of Hormuz on Sunday, the first known American strikes on the country since late July, Reuters reported. Iran responded by attacking two US air bases in Jordan, according to Iranian media citing the Revolutionary Guards.
US President Donald Trump said in a social media post on Sunday that Iran's energy hub of Kharg Island was being "blown to smithereens." The post was accompanied by an AI-generated clip and contained no further details, and Reuters found no evidence the island had been struck. Iran denied any attack on Kharg Island and said oil operations there continued uninterrupted.
Efforts to end the conflict remain stalled while mediators work to reopen the Strait of Hormuz, through which a fifth of the world's oil flowed before the war began at the end of February, Reuters reported.
Suvro Sarkar, head of energy research at DBS, said he expected contained confrontation rather than sustained escalation, though hopes of resuming US-Iran negotiations by the end of the third quarter now looked unlikely. He said he continued to "expect oil prices to remain rangebound in the $85-95 per barrel range" unless more clarity emerged on the situation in the strait.
Shipping caution and new sanctions
The number of commodity vessels sailing through the strait over the weekend dropped to five a day, shipping data showed on Monday, reflecting growing caution among companies wary of attacks on ships, according to Reuters. The United Kingdom Maritime Trade Operations reported on Sunday that a tanker had been struck by a projectile while sailing inbound through the strait on Saturday.
US Treasury Secretary Scott Bessent told Reuters on Sunday that Washington was likely to issue new secondary sanctions on Iran on a weekly basis.
Brent and WTI are on track for small declines in August after falling more than 4% last week, marking their first weekly decline in three, Reuters reported.
Reserve refill using Venezuelan oil
Trump said on Sunday that oil from a recently struck deal with Venezuela would be used to replenish the US Strategic Petroleum Reserve, which has dropped to near its lowest level in 44 years.
Source: Reuters
