Oil Prices Rise as US-Iran Strikes Renew Supply Concerns in Strait of Hormuz

Oil prices edged higher on Monday as renewed military exchanges between the United States and Iran raised fresh concerns over energy supplies moving through the Strait of Hormuz, highlighting the fragile state of the interim peace agreement between the two countries.

Brent crude futures gained 58 cents, or 0.8 percent, to trade at $72.57 a barrel in early trading, while US West Texas Intermediate crude rose 88 cents, or 1.3 percent, to $70.11 a barrel.

The gains followed several days of escalating attacks involving both countries, including strikes on ships operating near the Strait of Hormuz, one of the world’s most important oil transit routes. The latest violence has slowed tanker movements and revived fears of supply disruptions after hopes had grown that shipping activity was beginning to recover.

Analysts at ING said the oil market continues to face considerable risks despite expectations that exports from the Gulf will gradually improve.

They noted that many traders appear focused on the prospect of recovering oil flows rather than the possibility that ongoing instability could delay a return to normal supply levels. According to the bank, such optimism may leave the market vulnerable if disruptions continue longer than expected.

Brent crude lost more than 10 percent last week, marking its third consecutive weekly decline, after crude shipments through the Strait of Hormuz climbed to their highest levels since fighting involving Iran began in late February.

That recovery has since slowed after renewed attacks on commercial shipping, including an incident involving a Qatar-linked oil tanker. The exchange of attacks prompted fresh military action by both Washington and Tehran, representing the most serious escalation since the two sides agreed to a temporary peace arrangement earlier this month.

Despite the latest tensions, a US official said on Sunday that Washington and Tehran had agreed to halt recent hostilities in the Gulf and resume discussions over disputes involving navigation through the Strait of Hormuz.

Analysts at ANZ said the market may now reassess earlier expectations that Gulf oil supplies would quickly return to normal. They warned that continuing security concerns could delay the recovery of production and exports.

Saudi Arabia also resumed crude loadings from Saudi Aramco’s Ras Tanura export terminal on Friday after operations had been suspended for nearly four months. The reopening came as producers increased output ahead of the interim agreement between the United States and Iran.

Operations at the terminal continued even after a company helicopter crashed near Ras Tanura on Sunday, killing 14 people. Authorities have not yet determined the cause of the accident.

While exports have resumed, analysts cautioned that physical oil flows remain constrained by tanker congestion, damaged infrastructure and reduced production at some facilities.

ANZ said it could take the remainder of the year before oil supplies from the region recover to levels seen before the conflict, suggesting that uncertainty surrounding the global energy market is likely to persist despite renewed diplomatic efforts.