Oil Prices Jump Over 2% Amid Hormuz Escalation

LONDON: (Finance Desk) – Oil prices climbed more than 2% on Monday after the United States carried out a strike on Iran’s Larak Island in the Strait of Hormuz, followed by reported Iranian retaliation, intensifying concerns over energy supplies from the region.

Brent crude futures rose $2.51, or 2.85%, to $90.61 a barrel by 0241 GMT. US West Texas Intermediate (WTI) crude gained $2.13, or 2.55%, to $85.53 a barrel.

US forces struck two launchers on Iran’s Larak Island in the Strait of Hormuz on Sunday, marking the first known American strikes on the Gulf nation since late July.

Iran subsequently attacked two US air bases in Jordan, Iranian media reported on Monday, citing the Islamic Revolutionary Guard Corps.

Markets Brace For Further Escalation

The latest developments have heightened uncertainty in energy markets as investors assess the possibility of a prolonged confrontation.

“Looks like we are in another escalation phase,” said IG market analyst Tony Sycamore, adding that the duration of the latest escalation remained uncertain.

Sycamore said technical indicators suggested that a further rise in WTI above the $85.80-$85.90 resistance range could open the way toward last week’s high of $87.69, followed by July’s $93.50 level.

Hormuz Remains Key To Global Oil Supplies

Efforts to end the conflict remain stalled as mediators work to restore normal shipping through the Strait of Hormuz, one of the world’s most important oil transit routes.

Before the war began at the end of February, around one-fifth of global oil supplies passed through the strategic waterway.

US Treasury Secretary Scott Bessent told Reuters on Sunday that Washington was likely to impose new secondary sanctions on Iran every week, with the stated objective of cutting the country off from the dollar-based financial system.

Despite Monday’s increase, Brent and WTI remain on course for modest monthly declines in August following losses of more than 4% last week.

Shipping Activity Declines

ANZ analysts said continued oil flows through the Strait of Hormuz had helped ease immediate concerns about a major supply disruption.

However, shipping activity has shown signs of increasing caution. Data showed that the number of visible commodity vessels passing through the strait fell to around five vessels per day over the weekend.

The decline reflects growing concerns among shipping companies about the security risks associated with operating in the waterway.

The United Kingdom Maritime Trade Operations (UKMTO) reported on Sunday that a tanker was struck by a projectile while travelling inbound through the Strait of Hormuz on Saturday.

The combination of military escalation, reduced shipping activity and uncertainty over negotiations is keeping oil markets highly sensitive to developments around the strategic waterway.