Renewed military strikes and Strait of Hormuz concerns fuel sharp rebound in crude prices
ISLAMABAD: Brent oil prices surged about 4% to around $79 per barrel on Monday, snapping a two-day losing streak as renewed military escalation between the United States and Iran intensified concerns over global crude supplies.
The sharp rebound followed fresh missile exchanges over the weekend, with the United States carrying out its fourth strike against Iran within a week in response to an Iranian attack on a Cyprus-flagged container ship.
The renewed conflict reignited fears of supply disruptions through the Strait of Hormuz, one of the world’s most strategically important oil transit routes.
Strait of Hormuz Tensions Fuel Oil Rally
Iran announced that the Strait of Hormuz would remain closed “until further notice.” However, the claim was rejected by the U.S. Central Command, adding further uncertainty to global energy markets.
Any disruption to shipping through the Strait of Hormuz could significantly reduce global crude supplies, as roughly one-fifth of the world’s oil trade passes through the narrow waterway.
Diplomatic Hopes Fade
Brent oil prices had fallen during the previous two sessions after an interim understanding between Washington and Tehran raised hopes of easing regional tensions and improving Middle Eastern oil supplies.
Those gains were quickly reversed as the latest military confrontation weakened expectations for renewed diplomatic progress and heightened fears of prolonged instability.
Meanwhile, Tehran maintained that negotiations with Washington cannot resume unless the United States fulfils previous commitments regarding freedom of navigation through the Strait of Hormuz and the normalisation of Iranian oil exports.
Market Outlook
Analysts said Brent oil prices are expected to remain highly volatile as investors closely monitor developments in the Middle East.
Market participants are particularly watching for any disruption to shipping routes, changes in regional oil production or further military escalation, all of which could tighten global energy supplies and push crude prices higher.
The renewed geopolitical uncertainty has also raised concerns about its potential impact on global inflation, economic growth and energy security, especially for oil-importing economies.