Brent oil surges past $90 as US-Iran conflict hits Gulf shipping

Oil prices jumped on Monday, with Brent crude rising above US$90 a barrel, as intensified attacks between the United States and Iran deepened concern over energy shipments through the Strait of Hormuz.

Brent crude futures rose US$2.69, or 3.05%, to US$90.79 a barrel by 2343 GMT, touching their highest level since June 11. The gain extended a sharp rally from last week, when Brent rose 15.9%, its largest weekly increase since April.

US West Texas Intermediate crude also climbed, rising US$2.19, or 2.65%, to US$84.68 a barrel, its highest level since June 12. Front-month WTI prices gained 15.5% last week, their biggest weekly rise since early March.

The latest oil-market rally came as the Middle East conflict escalated over the weekend. The United States carried out a ninth consecutive night of attacks against Iran, while US allies Kuwait and Bahrain reported further Iranian strikes.

Both Washington and Tehran have increasingly focused on shipping traffic. The US says it is enforcing a naval blockade on Iranian ports, while Iran says it is targeting vessels that violate its navigation rules in the Strait of Hormuz, a waterway that normally handles about one-fifth of global oil trade.

The United Kingdom Maritime Trade Operations agency said early on Monday that a vessel was on fire northwest of Kumzar in Oman, adding to anxiety over the security of commercial shipping in the Gulf.

Barclays analyst Amarpreet Singh said the coming days and weeks would offer a clearer view of how much oil the region can continue exporting under renewed “dual blockades”. He added that oil markets still appeared too complacent about the potential impact on inventories, which are now at their tightest level in five years.

Shipping data also showed a slowdown in movement through the strait. Only four vessels transited the Strait of Hormuz on Sunday, down from eight the previous day, according to LSEG data cited by Reuters. At least three oil-product tankers and one very large crude carrier have entered the strait since Friday to load oil.

The renewed disruption has raised fears that any prolonged restriction on Gulf energy flows could push fuel costs higher, intensify inflation pressure and complicate the outlook for energy-importing economies in Asia.

Source: Reuters