Brent crude settled 5% higher at $91.17 a barrel on Monday, its best day since late July, after the U.S. and Iran exchanged military strikes for the first time in over a month. WTI gained 3.5% to $86.31 as the Strait of Hormuz standoff escalated alongside a separate U.S. oil agreement with Venezuela.
Oil caught a bid on Monday after the U.S. and Iran exchanged military strikes for the first time in over a month, sharply escalating tensions in the Middle East. Brent crude futures expiring in December rose 5% to settle at $91.17 a barrel, while U.S. West Texas Intermediate crude futures expiring in October gained 3.5% to settle at $86.31 a barrel.
US strikes minelaying forces near Larak Island
Late Sunday, U.S. Central Command said it carried out a limited, precise action against Islamic Revolutionary Guard Corps minelaying forces it described as posing an imminent threat in the Strait of Hormuz. The strike came just days after Trump said the chokepoint had been cleared of all mines, and it followed a weekend impasse in which both countries had separately asserted control over the waterway.
Iran's foreign ministry said the U.S. had struck parts of Larak Island, and that Tehran responded by hitting U.S. military bases in Jordan. Jordanian state media said the country intercepted and destroyed eight missiles in the exchange.
Trump threatens further strikes
According to Fox News: "We're going to hit them hard. There will be a response," Trump said Monday morning. He also posted a video on Truth Social warning of possible action against Iran's Kharg Island oil export terminal.
In a Sunday post, Trump described Iran as a failed nation, citing its lack of a navy or air force, unpaid soldiers and police, and inflation he put at 300%. Analysts at ING noted the key question is whether the exchange triggers further rounds of strikes and leaves shippers hesitant to navigate the strait.
Venezuela deal adds to supply picture
Before the strikes took over the headlines, markets had been digesting Friday's announcement of a U.S. oil agreement with Venezuela covering majority control of more than 65 billion barrels of proven oil reserves. Trump said the oil would go toward refilling the U.S. Strategic Petroleum Reserve, which government data showed fell by 3.1 million barrels in the week of August 28 to 286.6 million barrels, the lowest level since November 1982.
Including Monday's rally, oil still booked gains for August, though the advance was a fraction of July's surge.
Source: Commodities & Futures News
Trading involves risk.
Risk Disclaimer
