Oil prices remained firmly higher on Monday despite retreating from an early rally of almost 5%, with investors continuing to assess the potential impact of renewed military tensions between the United States and Iran on global crude supplies.
Both Brent and West Texas Intermediate (WTI) futures eased from session highs but continued to trade well above Friday’s close as concerns over the Strait of Hormuz remained at the forefront of energy markets.
Crude Prices Stay Elevated
At 03:43 ET (07:43 GMT), Brent crude futures were up 3.5% at $78.68 per barrel, while WTI crude futures gained 3.5% to $73.89 per barrel.
The contracts had climbed close to 5% earlier in the day after geopolitical tensions intensified over the weekend.
Renewed Conflict Raises Supply Concerns
The latest gains followed fresh Iranian missile and drone attacks targeting Qatar and the United Arab Emirates in response to recent U.S. military operations.
Iran also announced that the Strait of Hormuz had been closed after a commercial vessel was struck, increasing concerns over disruptions to one of the world’s most important oil export routes.
Although Washington disputed Tehran’s claims, President Donald Trump said commercial vessels continued to move through the Strait under U.S. protection.
Shipping Activity Reflects Rising Caution
Despite assurances from U.S. officials, shipping companies have become increasingly cautious.
Ship-tracking data showed that only six vessels crossed the Strait of Hormuz on Sunday, the lowest daily traffic recorded in five weeks.
“Shipping operators are adopting a cautious approach and inbound movements have slowed under heightening security concerns,” ANZ analysts said.
Market Watches for Further Supply Risks
ANZ noted that crude prices had eased late last week after signs that both Washington and Tehran were attempting to avoid a broader conflict.
However, the latest military exchanges and Iran’s renewed declaration regarding Hormuz have once again cast doubt over the stability of last month’s temporary agreement.
As the main export route for oil from Saudi Arabia, Iraq, Kuwait and the United Arab Emirates, any sustained disruption at Hormuz could increase shipping costs, tighten supplies and force refiners to source crude elsewhere.
Markets are also monitoring whether major producers will coordinate a response or whether governments will release strategic petroleum reserves if supply conditions deteriorate.
IEA Sees Recovery Dependent on Hormuz
The International Energy Agency (IEA) said last week that renewed tensions between the United States and Iran could undermine the expected recovery in global oil supplies if shipping through the Strait of Hormuz is interrupted.
According to the agency, world oil supply increased by 4.1 million barrels per day during June after exports resumed through the Strait, although production remains below pre-conflict levels.
The IEA expects supply to improve further in 2027 provided the shipping route remains operational.