Oil jumped more than 2% on Monday after the U.S. struck an Iranian island in the Strait of Hormuz and Iran retaliated, pushing their conflict into its sixth month. Brent crude rose above $90 a barrel and WTI approached $86, while traders weighed a shrinking flow of tankers through the strait against stalled negotiations to end the conflict.
Brent crude futures climbed $2.21, or 2.51%, to $90.31 a barrel as of 0436 GMT on Monday, while U.S. West Texas Intermediate crude rose $1.83, or 2.19%, to $85.23. The move came after U.S. forces struck two launchers on Iran's Larak Island in the strait.
US strike draws Iranian retaliation
The strike on Larak Island on Sunday marked the first known American attack on Iran since late July. In response, Iranian media reported that Iran attacked two U.S. air bases in Jordan, citing the Revolutionary Guards.
President Donald Trump said separately that Iran's Kharg Island energy hub was being destroyed, but there was no evidence the island had been struck, and his post — accompanied by an AI-generated clip — offered no further detail.
Strait traffic keeps thinning
Negotiations to end the war remain stalled while mediators try to reopen the Strait of Hormuz, through which a fifth of the world's oil flowed before the conflict began at the end of February. According to Suvro Sarkar, head of energy research at DBS: "more chances of contained confrontation rather than any sustained escalation" exist in the conflict, though every flare-up keeps pushing back the timeline for the strait's reopening.
The number of visible commodity vessels sailing through the strait over the weekend dropped to five a day, shipping data showed Monday. The UK Maritime Trade Operations also reported that a tanker was struck by a projectile while sailing inbound through the strait on Saturday.
Sanctions and supply pressure build
U.S. Treasury Secretary Scott Bessent told Reuters that Washington is likely to issue new secondary sanctions on Iran weekly. Even so, Brent and WTI are set to post small declines for August after falling more than 4% last week, their first weekly decline in three.
Trump said oil from a recently struck deal with Venezuela will be used to refill the U.S. Strategic Petroleum Reserve, which has dropped near its lowest level in 44 years.
Source: Investing.com (Reuters)
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