Crude Oil Climbs Above $90, Highest Since June

Oil prices surged by more than two per cent on Monday, with Brent crude climbing above $90 per barrel for the first time in weeks as escalating hostilities between the United States and Iran disrupted oil shipments through the Strait of Hormuz.Strait of Hormuz.

According to Reuters, Brent crude futures rose by $2.09, or 2.37 per cent, to $90.19 a barrel by 0241 GMT, reaching their highest level since June 11. The benchmark had already gained 15.9 per cent last week, marking its biggest weekly increase since April.

U.S. West Texas Intermediate (WTI) crude also advanced by $1.71, or 2.07 per cent, to $84.20 a barrel, its highest level since June 12, after posting a 15.5 per cent gain last week, the strongest weekly performance since early March.

The latest rally followed a further escalation in tensions across the Middle East, with the United States carrying out a ninth consecutive night of strikes against Iran over the weekend. U.S. allies Kuwait and Bahrain also reported fresh Iranian attacks.

“ICE Brent broke above $90 per barrel this morning with no let-up in the escalation in the Gulf,” ING analysts said in a note on Monday.

“The U.S. and Iran continue to exchange strikes, which are proving to be deadly for both sides. If this escalation goes unchecked, we could return to an environment of wide-scale attacks across the Gulf.”

The Islamic Revolutionary Guard Corps said on Monday that two oil tankers exploded and became immobilised after attempting to sail through what it described as an unsafe southern route in the Strait of Hormuz. It alleged that the vessels had been encouraged by the U.S. military to use the passage.

Reuters said it could not independently verify the incident.

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In recent days, both Washington and Tehran have intensified actions targeting shipping in the region. The United States said it was enforcing a naval blockade on Iranian ports, while Iran maintained it was targeting vessels that violated its navigation rules in the Strait of Hormuz, a strategic waterway that handles about one-fifth of global oil trade.

Separately, the United Kingdom Maritime Trade Operations agency reported early on Monday that a vessel was on fire northwest of Oman’s Kumzar.

Analysts said the ongoing conflict could tighten global oil supplies if disruptions persist.

“The coming days and weeks will provide a clearer picture of the sustainable level of oil exports from the region under renewed dual blockades,” Barclays analyst Amarpreet Singh said in a note.

“As things stand, we think oil markets are still too complacent about the potential fallout for inventories, which, unlike at the beginning of the war, are at the tightest of the past five years.”

Shipping activity through the Strait of Hormuz also slowed, according to data from the London Stock Exchange Group (LSEG). Four vessels transited the strait on Sunday, compared with eight the previous day. The data also showed that at least three oil products tankers and one Very Large Crude Carrier had entered the waterway since Friday to load crude oil.