Oil Markets On Edge: Brent Hits 5-Month High As Iran Threatens Strait Of Hormuz Closure After US Attacks

The latest price surge follows US President Trump declaring that American forces had "obliterated" Iran’s primary nuclear sites in joint operations with Israeli forces over the weekend

Since the onset of the conflict on June 13, Brent crude has climbed 13 per cent, while WTI has advanced about 10 per cent.

Source : Freepik

Crude oil prices climbed sharply on Monday, reaching their highest levels since January, as escalating military action involving the United States and Israel targeting Iran’s nuclear infrastructure triggered renewed concerns over global oil supply disruptions.

Around 6:47 AM, Brent crude futures had already climbed $1.92, or 2.49 per cent, to trade at $78.93 per barrel. US West Texas Intermediate (WTI) crude also saw a significant rise of $1.89, or 2.56 per cent, reaching $75.73. Both benchmarks had earlier spiked over 3 per cent during the session, hitting $81.40 and $78.40 respectively, before easing slightly from those highs, reported Reuters.

The latest price surge follows remarks from US President Donald Trump, who declared that American forces had "obliterated" Iran’s primary nuclear sites in joint operations with Israeli forces over the weekend. This marked a major escalation in tensions within the Middle East, as Tehran vowed to retaliate. Iran, a key member of OPEC, ranks as the cartel’s third-largest crude producer.

Strait of Hormuz Crisis

Market participants are increasingly anxious that Tehran's potential response could involve shutting down the Strait of Hormuz, a critical maritime passage through which approximately 20 per cent of the world’s crude oil supply is transported.

Reports from Iran's Press TV indicated that the Iranian parliament had passed a measure to authorise the closure of the strait — a step that, while threatened in the past, has never been fully executed.

"The risks of damage to oil infrastructure ... have multiplied," noted Sparta Commodities senior analyst June Goh. She pointed out that while alternative pipeline routes exist, they would be insufficient to handle the full volume of crude exports if the Strait of Hormuz were blocked. Additionally, growing safety concerns could deter shipping companies from entering the region, she added.

Goldman Sachs projected in a Sunday report that if crude flows through the Strait of Hormuz were halved for one month, Brent prices could temporarily soar to $110 per barrel, with supplies remaining reduced by 10 per cent over the subsequent 11 months.

However, the bank maintained that a significant long-term disruption remains unlikely, citing global efforts to avert a prolonged crisis in oil and natural gas supplies.

Market Rally Faces Resistance Despite Geopolitical Risk

Since the onset of the conflict on June 13, Brent crude has climbed 13 per cent, while WTI has advanced about 10 per cent. Nevertheless, some analysts suggest that the recent gains may be tempered unless actual supply disruptions materialise.

"The current geopolitical risk premium is unlikely to last without tangible supply disruption," analysts observed. Ole Hansen, head of commodity strategy at Saxo Bank, echoed this sentiment in his Sunday market commentary, noting that the recent rally could face resistance as some traders unwind long positions built during the price surge.