Oil prices surged Monday morning as the conflict between the United States and Israel against Iran entered its third week, maintaining a chokehold on global oil supplies and keeping the Strait of Hormuz closed. Brent crude and US West Texas Intermediate (WTI) futures have risen more than 40 percent this month, reaching levels not seen since 2022, following attacks on Iranian targets and Tehran’s subsequent halt to shipping through the critical waterway.
US President Donald Trump escalated tensions Saturday with a threat of further strikes targeting Iran’s Kharg Island oil export hub, prompting a defiant response from Tehran promising further retaliation. Iranian drone attacks followed shortly after, striking a key oil terminal in the United Arab Emirates. While oil loading operations at Fujairah have resumed, according to a local industry source, the incident underscored the vulnerability of regional energy infrastructure.
“This marks an escalation in the conflict,” analysts at JPMorgan Chase, led by Natasha Kaneva, stated. “Until now, the region’s oil infrastructure has largely been spared.” The analysts identified Saudi Arabia’s Ras Tanura export terminal and Abqaiq oil processing facilities as additional critical and vulnerable energy nodes in the Gulf region.
The disruption to shipping is expected to reduce global oil supply by eight million barrels per day in March, according to the International Energy Agency (IEA). Middle Eastern producers have independently curtailed output by at least 10 million barrels per day. In response to the escalating crisis, the IEA agreed last week to release a record 400 million barrels of oil from strategic stockpiles held by member nations, with Japan initiating its release Monday.
Despite the escalating military actions, diplomatic efforts to de-escalate the conflict have stalled. Three sources familiar with the situation report that the Trump administration has rebuffed attempts by Middle Eastern allies to initiate diplomatic negotiations. Simultaneously, Iran has rejected any possibility of a ceasefire while US and Israeli strikes continue, effectively eliminating prospects for a swift resolution.
Trump has called on China, France, Japan, South Korea, Britain, and other nations to deploy warships to secure the Strait of Hormuz, a request that has yet to elicit a unified response. The Guardian reported Sunday that Iran has denied requesting a ceasefire, contradicting earlier claims made by the Trump administration.
The situation remains volatile, with both sides signaling a willingness to continue military operations. The White House has not issued a statement responding to Iran’s latest retaliatory actions, and no further diplomatic initiatives have been announced.
