Oil prices jumped sharply on Monday after renewed hostilities between the United States and Iran rattled global markets and raised fears of supply disruptions in the strategically vital Strait of Hormuz.
Benchmark crude contracts surged in early trading, with U.S. West Texas Intermediate rising nearly 7 percent to around US$89.50 per barrel, while Brent crude gained more than 6 percent to trade above US$96.
The rally follows a weekend of escalating confrontations between the two countries involving attacks on commercial vessels in the Gulf region, intensifying concerns over the security of one of the world’s most critical oil transit routes.
The United States Navy said it fired on an Iranian container ship in the Gulf of Oman on Sunday, with U.S. Marines later taking custody of the vessel. President Donald Trump said the ship had attempted to breach a U.S. naval blockade of Iranian ports.
The incident came a day after Iran’s Islamic Revolutionary Guard Corps (IRGC) reportedly targeted a tanker in the Strait of Hormuz. According to maritime security officials, IRGC gunboats opened fire on the vessel, while a separate container ship in the area was struck by an unidentified projectile.
The rapid escalation has unsettled energy markets already sensitive to geopolitical risks, with analysts warning of heightened volatility in the days ahead.
“Oil prices are being whipsawed by developments in the Middle East once again,” said one commodities strategist, noting that hopes of de-escalation last week had quickly given way to renewed confrontation.
The Strait of Hormuz, located between Oman and Iran, handles roughly a fifth of global oil shipments, making any disruption to traffic a major concern for global supply and prices.
Tensions have intensified despite earlier indications that Washington and Tehran were moving closer to a diplomatic breakthrough.
A ceasefire agreement between the two sides is due to expire this week, and uncertainty surrounds the prospects for renewed negotiations. While Washington indicated that talks could take place in Islamabad, Iranian officials signalled they would not attend, citing the ongoing U.S. naval blockade and other grievances.
President Trump warned on Sunday of further military action if Iran does not agree to U.S. terms, calling the weekend attacks a “total violation” of the truce.
The latest developments mark a sharp reversal from Friday, when oil prices had fallen after Iran appeared to signal a reopening of the Strait of Hormuz to commercial traffic under a U.S.-brokered ceasefire arrangement.
However, the situation quickly deteriorated as Tehran indicated that restrictions on transit would remain in place unless the U.S. lifted its blockade. Washington has so far refused to do so.
Energy analysts say the risk of further escalation — including potential disruptions to tanker traffic — could keep prices elevated in the near term.
Beyond immediate supply concerns, the crisis also underscores the fragility of global energy markets, which remain highly exposed to geopolitical shocks in key producing regions.
As tensions continue to unfold, traders are expected to closely monitor developments in the Gulf, particularly any signs of military escalation or diplomatic progress that could influence oil flows through the Strait.
