Global oil prices climbed more than 2% on Monday as the Middle East conflict entered its sixth month. The surge followed a U.S. strike on Larak Island in the Strait of Hormuz, Iranian retaliation in Jordan, and severe disruptions to maritime and regional transit routes.
Crude markets climbed sharply as geopolitical tensions intensified in the Strait of Hormuz, a critical maritime corridor through which a fifth of global oil flowed before the war began at the end of February. Brent crude futures climbed $2.51, or 2.85%, to $90.61 a barrel as of 2:41 am GMT. At the same time, U.S. West Texas Intermediate crude sat at $85.53, marking an increase of $2.13, or 2.55%, according to market reports.
Escalating Strikes Across the Gulf and Regional Bases
The latest market jump followed military actions that marked a notable escalation in the ongoing regional conflict. U.S. forces struck two launchers on Iran’s Larak Island in the Strait of Hormuz, representing the first known American strikes on the Gulf nation since late July. In response, Iran attacked two U.S. air bases in Jordan, according to Iranian media citing the Revolutionary Guards.
Simultaneously, diplomatic and security pressures mounted across neighboring territories. In a separate incident detailed by Reuters, an Iranian drone and missile attack struck Kuwait International Airport, damaging facilities and diplomatic missions, killing one person, and injuring more than 60 others. Kuwaiti authorities and state media confirmed the facility damage, though the Revolutionary Guards denied firing at the airport and blamed the destruction on malfunctioning U.S. interceptor missiles. U.S. Central Command rejected that explanation, stating that Iranian drones deliberately targeted the airport.
Strait of Hormuz Disruption and Shipping Cautiousness
The persistent threat to commercial navigation has severely choked maritime traffic through the vital petroleum chokepoint. Shipping data showed that the number of visible commodity vessels sailing through the Strait of Hormuz dropped to five a day over the weekend, reflecting acute caution among shipping companies wary of vessel attacks. The United Kingdom Maritime Trade Operations reported that a tanker was struck by a projectile while sailing inbound through the strait.
Analysts point out that while diplomatic efforts to reach a settlement continue, physical realities on the water dictate price action. Suvro Sarkar, head of energy research at DBS, noted the immediate market sentiment.
We see more chances of contained confrontation rather than any sustained escalation in the conflict. What continues to be impacted with every flare up are the timelines for Hormuz ‘reopening’.
Suvro Sarkar, head of energy research at DBS
Sarkar added that expectations for returning to U.S.-Iran deal negotiations by the end of the third quarter are diminishing, leaving market watchers anticipating that oil prices will remain rangebound in the $85-95 per barrel range until concrete clarity emerges regarding the strait.
Ceasefire Shifts and Diplomatic Stalemate
While hostilities in the Gulf continued to flare, the Trump administration announced that Israel and Lebanon agreed to implement a ceasefire to end hostilities, providing a potential boost to hopes for a broader agreement involving Iran. The arrangement is contingent on a complete cessation of fire from the Hezbollah militia and the evacuation of all its operatives from the South Litani Sector, per a joint statement issued by the U.S. State Department.
Despite this diplomatic opening on the northern front, broader talks remain deadlocked. Iran’s Foreign Minister Abbas Araqchi stated that communication channels have not been cut off, but emphasized that no progress has been made. Tehran continues to condition any comprehensive deal on access to billions of dollars in oil revenue, crude export sanction waivers, and the lifting of port blockades.
Secondary Sanctions and Strategic Reserves
U.S. Treasury Secretary Scott Bessent told reporters that the administration is likely to issue new secondary sanctions weekly on Iran, with the explicit aim of cutting the nation off entirely from the dollar-based financial system. Meanwhile, President Donald Trump stated that oil secured from a recent agreement with Venezuela will replenish the U.S. Strategic Petroleum Reserve, which has fallen near its lowest level in 44 years.
Market analyst Tony Sycamore of IG cautioned that trading conditions remain highly volatile as the market cycles through successive escalation phases. Technical charts suggest that if conflict escalation pushes West Texas Intermediate past resistance levels between $85.80 and $85.90 a barrel, subsequent gains could quickly test last week’s high of $87.69 and July’s high.
