Oil Jumps Above $90 as Fresh US-Iran Strikes Revive Hormuz Supply Fears
LONDON, UNITED KINGDOM — WEB DESK: Global oil prices surged more than 2% on Monday, with Brent crude moving above $90 a barrel, after renewed military exchanges between the United States and Iran revived concerns over shipping and energy supplies through the strategically vital Strait of Hormuz.
Brent crude futures rose $2.21 to $90.31 a barrel, while US West Texas Intermediate crude climbed $1.83 to $85.23, according to the latest Reuters market reporting.
The gains accelerated from earlier Asian trading. Express Urdu had reported Brent up $1.08, or 1.23%, at $89.18, while WTI was 92 cents, or 1.10%, higher at $84.32. Those figures were an earlier market snapshot and should not be treated as the latest available prices.
The latest Reuters data subsequently showed Brent advancing as high as around $90.60, a gain of roughly 2.8%, as geopolitical tensions weighed on global financial markets.
Why Are Oil Prices Rising?
The immediate catalyst was a renewed exchange of military action between Washington and Tehran after several weeks of comparatively reduced direct fighting.
US forces struck two Iranian rocket launchers on Larak Island, near the Strait of Hormuz, over the weekend. Washington said Revolutionary Guard forces were preparing to use the launchers to deploy rockets carrying sea mines into the strategic waterway.
The US military characterised its action as a response to what it considered an imminent threat to international shipping.
Iran condemned the strike as aggression and retaliated against US positions in Jordan. Iranian forces launched ballistic missiles toward two US military bases there, while Jordan said it intercepted incoming missiles.
The competing claims surrounding the military operations remain important: Washington’s assertion that Iran was preparing a mine-related operation is the US account of the threat, while Iranian statements about casualties and retaliatory damage require independent verification.
Hormuz Supply Risk Returns to Market
For oil traders, the most significant concern is not simply the exchange of fire itself but where it is happening.
Larak Island lies close to the Strait of Hormuz, the narrow maritime corridor linking the Persian Gulf with the Gulf of Oman.
Roughly one-fifth of global oil flows normally pass through the waterway, making even limited military disruption capable of producing significant price volatility.
Shipping through Hormuz has already been severely affected during the six-month conflict.
Although US naval operations and escorts have helped Gulf oil exports recover, Reuters reported that flows remain vulnerable. Gulf oil exports have recently recovered to around 15 million to 16 million barrels per day, after falling much lower earlier in the conflict.
That recovery helps explain why crude prices remain well below some of the extreme forecasts made when the war began.
It also means renewed mine threats or attacks on vessels could quickly reverse recent improvements.
Express Prices Were an Early Snapshot
The timing of commodity-market reports is particularly important for this story.
Express Urdu’s original report quoted Brent at $89.18 and WTI at $84.32, representing gains of $1.08 and 92 cents respectively.
Those figures were accurate for the earlier trading period covered by the report.
However, oil continued rising afterward.
Reuters subsequently reported Brent at $90.31 and WTI at $85.23, both more than 2% higher.
For a publication being updated on August 31, the later figures provide a more current headline and market picture.
Brent Recovers After Weekly Decline
Monday’s rally also represents a sharp reversal from Friday.
Oil prices had ended last week lower as traders considered signs of possible progress toward easing restrictions around Hormuz alongside monetary-policy uncertainty.
Brent settled at $88.10 a barrel on Friday, while WTI closed at $83.40, with both benchmarks recording weekly losses.
The renewed US-Iran confrontation changed market sentiment over the weekend.
From Friday’s Brent settlement of $88.10 to Monday’s $90.31 Reuters snapshot, the international benchmark gained approximately 2.5%.
Conflict Has Produced Extreme Oil Volatility
Crude prices have experienced unusually large swings during the conflict.
When the United States and Israel went to war with Iran at the end of February, some analysts warned crude could potentially surge toward $150 or even $200 if Hormuz flows were severely disrupted.
Those worst-case projections have not materialised.
Oil has nevertheless experienced several sharp rallies.
Brent moved above $100 in July amid attacks on Gulf energy shipping, while earlier in the conflict it briefly traded above $126.
Prices subsequently retreated as some Gulf exports recovered and expectations of diplomatic progress periodically reduced the geopolitical risk premium.
Monday’s move above $90 demonstrates that the market remains highly sensitive to any indication that Hormuz could again become more difficult or dangerous for commercial shipping.
Tanker Risks Remain Elevated
The latest confrontation comes as commercial vessels continue operating under heightened risk.
Reuters reported that ship traffic through the strait has dwindled substantially compared with normal levels, while a tanker was recently hit by a projectile, reinforcing concerns about the safety of vessels in the region.
Insurance costs, naval escorts, mines and the willingness of shipping companies to enter the Gulf all affect how much crude can reach international markets.
A complete closure of Hormuz is therefore not required for oil prices to rise.
Even the prospect of reduced flows, higher insurance costs or further military escalation can add a geopolitical risk premium to crude.
Trump’s Kharg Island Claim Remains Unconfirmed
US President Donald Trump also made a social-media claim concerning Kharg Island, Iran’s principal oil export terminal.
However, Reuters said Trump’s suggestion of major damage to the facility remained unconfirmed.
This distinction is crucial because a verified major disruption at Kharg could have substantially greater implications for Iranian oil exports and global prices.
Until independent evidence or official corroboration establishes significant damage, the claim should not be reported as confirmation that Iran’s main oil terminal has been destroyed.
US Looks to Refill Strategic Petroleum Reserve
Washington is simultaneously considering its own energy-security position.
Trump said the United States intends to use Venezuelan oil under a new arrangement to replenish the Strategic Petroleum Reserve, which Reuters reports has fallen to around 290 million barrels, its lowest level in 44 years.
However, increasing Venezuelan production significantly would require investment and infrastructure improvements, meaning the announcement does not necessarily translate into an immediate surge in available supply.
Higher Oil Could Complicate Inflation Outlook
The renewed crude rally has implications beyond energy markets.
Asian equities fell on Monday as investors reacted to both geopolitical tensions and expectations that US interest rates could remain higher. Japan’s Nikkei declined about 1.6%, while South Korean shares dropped around 2.2% in the latest Reuters market snapshot.
Persistently higher crude prices can feed into transport, manufacturing and consumer costs, complicating efforts by central banks to contain inflation.
That risk is particularly relevant as investors reassess the outlook for US monetary policy.
What Happens Next?
The immediate direction of oil prices is likely to depend heavily on whether the latest US-Iran exchange remains limited or develops into another sustained round of military confrontation.
Analysts cited by Reuters expect continued volatility, with oil potentially trading in a broad $85-$95 range under current conditions.
Three developments will be particularly important: the security of commercial shipping through Hormuz, any further US or Iranian military operations around the strait, and whether diplomatic efforts can resume.
For now, Monday’s rally indicates that traders have again added a significant geopolitical premium to crude.
The market is not pricing in a complete shutdown of Gulf oil exports, but renewed fighting near one of the world’s most important energy chokepoints has made the risk of further disruption difficult to ignore.
