Oil prices jumped more than 3.5% on Monday as fresh military strikes between the US and Iran raised fears that the conflict could disrupt global oil supplies. Brent crude prices rose $3.15, or 3.58%, to $91.25 a barrel at 0903 GMT on Monday. US West Texas Intermediate (WTI) crude also climbed $2.96, or 3.55%, to $86.36 a barrel.
The conflict has now entered its sixth month.
The Larak Island attack was the first known US strike on Iran since late July, adding to concerns that military tensions between the two countries could increase again. Any further military action could increase concerns about oil supply and push prices higher. The latest oil price jump was also made bigger by low trading volumes. The post included an AI-generated video but gave no further details. There was no evidence that Kharg Island was under attack at the time.
Because of a public holiday in the UK, according to Reuters, saxo Bank analyst Ole Hansen said trading was thinner.
The US military struck two Iranian launchers on the island, according to Reuters, citing a US official. “Renewed military strikes in the Middle East and concerns of further oil supply disruptions have lifted oil prices,” UBS analyst Giovanni Staunovo said, according to Reuters. Markets are now watching whether the conflict will get worse or begin to calm down, Staunovo said. Iran denied that the island had been attacked and said its oil operations were continuing.
The latest rise came after US forces attacked Iran’s Larak Island in the Strait of Hormuz on Sunday. A tanker was also hit by a projectile while entering the Strait of Hormuz on Saturday, the United Kingdom Maritime Trade Operations agency said on Sunday. Trump also made a claim about Iran’s Kharg Island, saying in a social media post on Sunday that the country’s major energy hub was being “blown to smithereens.
Brent and WTI had already fallen more than 4% last week, their first weekly declines in three weeks. Despite Monday’s sharp rally, oil prices are still expected to post monthly losses for August. The US is also looking at increasing its emergency oil reserves.
Trump said on Sunday that oil obtained under a recently reached deal with Venezuela would be used to replenish the US Strategic Petroleum Reserve.
