Strait of Hormuz Tensions Drive Oil Prices Past US$90 a Barrel

Global oil prices surged on Monday morning, driven by escalating conflict in the Middle East that is increasingly disrupting energy shipments through the Strait of Hormuz. Brent crude jumped 2.51% to US$90.31 per barrel, while West Texas Intermediate (WTI) rose 2.25% to US$84.35 per barrel, pushing Brent back above the psychological US$90 mark for the first time in over a month. The rally extends a strong weekly performance, with Brent gaining approximately 15.9% and WTI 15.5% over the past week.

Geopolitical tensions intensified over the weekend as the United States conducted a ninth consecutive night of strikes against Iran, while Kuwait and Bahrain reported fresh attacks originating from Iran. Washington stated it is enforcing a naval blockade on Iranian ports, and Tehran responded by threatening action against vessels violating its rules in the Strait of Hormuz, a vital waterway through which roughly 20% of the world’s oil trade passes.

Shipping activity in the strait has already slowed markedly. On Sunday, only four ships transited the area, down from eight the previous day. Since Friday, just three product tankers and one Very Large Crude Carrier (VLCC) have entered the area to load oil. The United Kingdom Maritime Trade Operations (UKMTO) also reported a vessel on fire near Kumzar, Oman, close to the strait’s entrance, heightening security concerns.

Barclays analyst Amarpreet Singh noted that the coming days and weeks will be critical in determining how much oil exports from the region can be maintained amid the mutual blockades. He cautioned that the market has yet to fully price in the potential strain on global oil inventories, which are already at their tightest levels in five years, making any supply disruption from the Middle East particularly impactful.