Oil prices rose by nearly 2 per cent on Monday after the United States launched fresh strikes on Iran, triggering retaliation and raising renewed concerns over the reopening of the Strait of Hormuz.
Brent crude futures rose $1.77, or 2 per cent, to $89.87 a barrel by 7:33 a.m. GMT, while US West Texas Intermediate crude gained $1.45, or 1.74 per cent, to $84.85.
Diaspora Digital Media reported that the latest escalation came after US forces struck two Iranian launchers on Larak Island in the Strait of Hormuz on Sunday, marking the first known American strikes on Iran since late July.
Iran’s Islamic Revolutionary Guard Corps subsequently said it attacked two US air bases in Jordan, according to Iranian media reports.
US President Donald Trump also claimed on Sunday that Iran’s Kharg Island, a major energy hub, was being “blown to smithereens”.
However, there was no evidence that the island had come under attack.
The post, which was accompanied by an AI-generated video, provided no further details.
Iran denied that Kharg Island had been attacked and said oil operations on the island were continuing.
The latest exchange of attacks comes as negotiations aimed at ending the conflict remain deadlocked, while mediators work to reopen the Strait of Hormuz.
About one-fifth of the world’s oil previously passed through the strategic waterway before the conflict began at the end of February.
Suvro Sarkar, head of energy research at DBS, said the latest developments were more likely to result in a contained confrontation than a sustained escalation.
“What continues to be impacted with every flare-up are the timelines for Hormuz reopening,” he said.
Sarkar added that hopes for a return to US-Iran negotiations by the end of the third quarter were now becoming less likely.
He projected that oil prices could remain within the $85 to $95 per barrel range unless there was greater clarity over the situation in the Strait of Hormuz.
Shipping data showed that the number of visible commodity vessels passing through the Strait fell to about five a day over the weekend, as shipping companies remained cautious over the risk of attacks.
The United Kingdom Maritime Trade Operations also reported on Sunday that a tanker was hit by a projectile while travelling inbound through the Strait on Saturday.
Meanwhile, US Treasury Secretary Scott Bessent told Reuters on Sunday that Washington was likely to impose new secondary sanctions on Iran every week as it seeks to increase pressure on Tehran.
Despite Monday’s rise, Brent and WTI are still expected to record modest declines for August after both fell by more than 4 per cent last week, their first weekly decline in three weeks.
Trump also said on Sunday that oil from a recently reached deal with Venezuela would be used to replenish the US Strategic Petroleum Reserve, which has fallen close to its lowest level in 44 years.
