Global oil and gas equities moved higher on Monday as crude prices climbed back above $100 per barrel, following U.S. action to restrict maritime flows linked to Iran through the Strait of Hormuz after negotiations between Washington and Tehran broke down.
Brent crude rose 7.3% to $102.16 per barrel by 08:35 GMT, while U.S. benchmark West Texas Intermediate jumped around 8% to $104.24. Both contracts had closed lower at the end of last week before reversing course.
The rebound in oil prices lifted energy shares across major markets. In the U.S., ExxonMobil (NYSE:XOM) and Chevron (NYSE:CVX) each gained more than 2% in premarket trading, while ConocoPhillips (NYSE:COP) advanced 3.4% and Occidental Petroleum (NYSE:OXY) rose 3.1%.
In Europe, BP plc (LSE:BP.) and Shell plc (LSE:SHEL) both added around 1.4%, while TotalEnergies (EU:TTE) edged up 1.3% and Repsol (BIT:1REP) gained about 2%.
U.S. President Donald Trump said on Sunday that the Navy would initiate a blockade of the Strait of Hormuz, escalating tensions after prolonged talks with Iran failed to deliver an agreement and putting a fragile two-week ceasefire at risk. He also warned that fuel costs could remain elevated through the November midterm elections.
U.S. Central Command confirmed that the measure would take effect at 10 a.m. ET on Monday, targeting maritime traffic linked to Iranian ports in the Arabian Gulf and Gulf of Oman. However, vessels passing through the Strait to or from non-Iranian ports would still be allowed to transit, according to CENTCOM.
The development comes shortly after a ceasefire had briefly eased tensions, reopening shipping routes through the Strait and driving oil prices sharply lower last week before the latest rebound.
Rabobank energy strategist Joe DeLaura had cautioned during last week’s decline that oil markets were underestimating risks, stating that futures prices were “far too optimistic” and that there remained “so much risk to the upside” not yet reflected.
“There’s permanent production loss from the shut ins in Saudi, Kuwait, UAE and Iraq. Refinery and pipeline damage plus the physical restart times, on top of the backlog of 800+ tankers trapped on the west side of the Strait,” he told Investing.com.
“Brent futures seem to have a floor around $90, and I think no ceasefire (no easy opening of a mined strait of Hormuz) means that futures will eventually have to start matching physical markets around $120-130/bbl (or more!).”