Oil Surges Following New U.S. Strikes on Iran

SadaNews - Oil surged as the United States and Iran exchanged new strikes, while both sides made conflicting statements about whether the Strait of Hormuz remains open.

Brent crude rose above $79 per barrel after a 5.4% increase last week, while West Texas Intermediate crude traded around $74.

Iran stated that the strait would be closed "until further notice," a claim denied by U.S. Central Command, which said its forces had initiated further strikes to ensure freedom of navigation through the waterway.

The strikes on Sunday afternoon marked the fourth carried out by the United States in a week, with U.S. Central Command stating they were in response to an Iranian attack on a Cypriot-flagged cargo ship. CNN reported that the "Revolutionary Guard" fired again at commercial vessels, and U.S. aircraft intercepted an Iranian cruise missile and an offensive drone.

This uncertainty is adding a war premium to crude prices, which had erased their gains after a temporary peace agreement between the two sides allowed for the possibility of increased supplies from the Gulf.

The International Energy Agency stated on Friday that renewed escalation threatens to disrupt efforts to rebuild depleting global oil stocks later this year, serving as a reminder of what is at stake for the global economy if the conflict continues.

Sol Caufohnick, senior energy analyst at MST Marquee, said that while renewed tensions represent an escalation, it is "far from all-out hostilities." He added, "We are likely to see oil prices gradually rise as long as the strikes continue and navigation through the strait remains cautious."

Escalating Fighting Brings War Premium Back to Energy Markets

European natural gas also rose amid fears the escalation could disrupt shipments from Gulf producers. Futures climbed by as much as 2.7% after rising nearly 8% last week.

Traffic through the strait, a waterway that normally carries about one-fifth of global crude and liquefied natural gas supplies, was almost nonexistent on Monday, extending a slowdown that has continued since tensions flared last week. However, the Joint Maritime Information Center reported that the southern shipping route coordinated by Oman remains open.

The recent escalation has undermined diplomatic prospects. Iranian Parliament Speaker and chief negotiator Mohammad Baqer Qalibaf declared that "the era of unilateral deals is over," while insisting Tehran requires Washington to first fulfill its previous commitments regarding transit through Hormuz and permit oil exports before resuming talks.

Meanwhile, President Donald Trump announced that the ceasefire "is over," but stated that the United States remains ready to continue negotiations.

Over the weekend, Iranian media reported hearing blasts east of Bandar Abbas, near the strait. Tehran has launched retaliatory drone and missile attacks on countries throughout the Middle East, including Kuwait, Jordan, and Qatar.

The attack on a Kuwaiti oil drilling facility marked the first direct hit on oil infrastructure in weeks, and if the conflict expands to target energy infrastructure more broadly in the region, oil prices could reach $100, according to Caufohnick.

Over the past month, Gulf producers, including the UAE, marketed additional crude quantities after the temporary agreement eased concerns about exports. The UAE, in particular, has been among the most successful in moving barrels using tankers sailing without signals, or with transponders turned off.