Media365
Global oil prices climbed to their highest levels in more than a month on Monday as the collapse of the ceasefire between the United States and Iran heightened fears of supply disruptions through the Strait of Hormuz, one of the world’s most important oil shipping routes.
Brent crude futures for September delivery rose $2.60, or 2.95 per cent, to $90.70 a barrel, after earlier climbing above $91, the highest level since mid-June. US West Texas Intermediate (WTI) crude futures gained $2.03, or 2.48 per cent, to $83.81 a barrel.
The rally came after Tehran declared that its ceasefire with Washington had effectively collapsed, fuelling concerns that the conflict could spread further across the energy-rich Gulf region and threaten global oil supplies.
Hormuz back in focus
The Strait of Hormuz, which handles roughly a fifth of global oil consumption, has once again emerged as the focal point of the conflict.
The Iranian Navy said on Sunday it had intercepted four unidentified vessels attempting to transit the strait via what it described as an “unsafe route” after the ships ignored repeated warnings.
According to Iranian authorities, two of the vessels “met with accidents and were stopped in their tracks,” while the remaining two abandoned the route and turned back.
The United States has also resumed blockading the Strait of Hormuz, while Iranian attacks on ships around the waterway have disrupted the “shuttle run” trade used by Persian Gulf producers to transport crude cargoes.
US Energy Secretary Chris Wright said the number of ships passing through Hormuz has declined, although larger oil tankers are continuing to make the journey.
Any prolonged disruption to traffic through the narrow waterway could significantly affect global crude supplies and push prices higher.
Conflict expands beyond military targets
The latest escalation follows a week of tit-for-tat strikes between the United States and Iran that have increasingly targeted civilian and economic infrastructure rather than solely military assets.
The attacks have expanded to include bridges, utilities and port facilities, signalling little prospect of a return to the fragile ceasefire.
Kuwait Petroleum said Iran struck one of its oil facilities on Saturday, causing significant damage.
Elsewhere, Kuwait bore the brunt of Iran’s retaliation, while Bahrain also came under attack. Israel said on Sunday it intercepted an Iranian drone near the Israel-Syria border.
Iranian media reported that US forces struck Qeshm Island in the Persian Gulf as well as the southern Iranian cities of Shadegan, Sirik and Hajiabad.
Red Sea shipping risks mount
Markets are also watching developments in the Red Sea, another critical maritime trade corridor.
Iran-backed Houthi militants in Yemen have repeatedly targeted commercial shipping during previous periods of heightened regional tensions. Last week, the group’s leader threatened to attack Saudi Arabian oil facilities after launching ballistic missiles and drones toward the kingdom.
Markets brace for prolonged volatility
Oil markets have remained highly sensitive to geopolitical developments in West Asia over the past several weeks, with traders closely monitoring risks to supply from the Gulf.
The collapse of the US-Iran ceasefire has revived concerns that energy exports from the region could face prolonged disruptions. While oil infrastructure has so far avoided widespread damage, attacks on shipping lanes and export facilities have increased the geopolitical risk premium embedded in crude prices.
If hostilities intensify further or spread to major oil-producing facilities, analysts warn Brent crude could move decisively above the $90-a-barrel mark in the near term, adding fresh inflationary pressures for energy-importing economies such as India.
