Oil prices climbed sharply at the start of the week after fresh military exchanges between the United States and Iran reignited fears over the security of the Strait of Hormuz, one of the world’s most critical energy shipping routes.
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Brent crude traded above $79 per barrel, while U.S. West Texas Intermediate (WTI) hovered near $74, extending gains after last week’s rally. The latest increase comes as uncertainty grows over whether commercial vessels can continue transiting the strategic waterway.
Confusion surrounding the status of the Strait of Hormuz has added to market anxiety. Iranian officials announced that the waterway had been closed “until further notice,” while U.S. Central Command (CENTCOM) rejected the claim, insisting coalition forces are continuing operations to safeguard freedom of navigation.
The renewed tension follows another round of U.S. military strikes targeting Iranian assets after Tehran allegedly launched attacks on a Cyprus-flagged container ship. According to CENTCOM, the operation was intended to protect commercial shipping. Meanwhile, reports indicated that U.S. forces intercepted Iranian drones and cruise missiles allegedly aimed at vessels operating in the region.
The escalation has quickly restored a geopolitical risk premium to global oil markets after prices had eased in recent weeks on hopes that a temporary U.S.-Iran agreement would stabilize Gulf energy exports.
Energy analysts say the renewed conflict threatens efforts to rebuild global crude inventories later this year and could prolong market volatility if tensions continue.
“The latest developments are clearly adding fresh uncertainty,” said Saul Kavonic, Senior Energy Analyst at MST Marquee. While he noted the conflict has not yet escalated into a full-scale regional war, he expects crude prices to remain under upward pressure as long as military action continues and shipping through Hormuz remains uncertain.
Natural gas markets are also reacting to the deteriorating security situation. European gas futures rose after traders expressed concerns that LNG exports from Gulf producers could face further disruptions if the conflict intensifies.
Commercial shipping activity through the Strait of Hormuz has slowed significantly. The vital corridor normally carries around 20% of the world’s crude oil and liquefied natural gas exports, making any disruption a major concern for global energy markets. Although maritime authorities say the southern shipping lane coordinated by Oman remains operational, vessel traffic remains limited as shipowners assess the security risks.
Diplomatic efforts also appear to be losing momentum. Iranian officials accused Washington of failing to honor previous commitments regarding shipping access and oil exports, while U.S. President Donald Trump indicated that the earlier ceasefire arrangement was effectively over, although he left the door open for future negotiations.
Over the weekend, explosions were reported near Bandar Abbas, close to the Strait of Hormuz, while Iran reportedly launched drone and missile attacks targeting U.S. allies in the Middle East, including Kuwait, Jordan and Qatar.
One of the attacks reportedly struck a Kuwaiti oil drilling facility, marking the first direct hit on regional energy infrastructure in weeks. Analysts warn that if critical oil production or export facilities become targets, crude prices could climb toward $100 per barrel.
Despite the renewed tensions, some Gulf producers had recently begun increasing exports after earlier diplomatic progress eased concerns over regional supply. The United Arab Emirates, in particular, had expanded crude shipments using alternative transport strategies designed to minimize disruption.
With military operations continuing and uncertainty surrounding one of the world’s most important energy chokepoints growing, traders are bracing for further volatility in oil markets as geopolitical risks remain firmly in focus.
