US-Iran war: Oil prices surged on Monday, 13 July, after the US and Iran exchanged fresh military strikes, while both sides issued conflicting claims over the status of the Strait of Hormuz, a key global energy shipping route.
Brent crude climbed 3% above $78 a barrel after gaining 5.4% last week, while US benchmark West Texas Intermediate hovered near $74. European natural gas prices also advanced by as much as 2.7%.
What’s driving crude oil prices today?
Iran claimed the Strait of Hormuz had been closed “until further notice,” a statement rejected by the US Central Command (Centcom), which said it had launched further attacks to safeguard freedom of navigation through the strategic waterway.
Sunday’s strikes marked the fourth round of US military action in a week. Centcom was quoted as saying by Bloomberg that the operation was carried out in response to Iranian attacks on a Cyprus-flagged container vessel.
Meanwhile, CNN reported that Iran’s Islamic Revolutionary Guard Corps had again targeted commercial ships, prompting US forces to intercept an Iranian cruise missile and an attack drone.
The renewed conflict has restored a geopolitical risk premium to crude oil prices, reversing earlier declines that followed a temporary peace agreement, which had raised hopes of increased oil supplies from the Persian Gulf.
The International Energy Agency (IEA) warned on Friday that the latest escalation could disrupt efforts to rebuild global oil inventories later this year, highlighting the potential economic consequences of a prolonged conflict.
Shipping activity through the strait, which handles nearly one-fifth of global crude oil and liquefied natural gas supplies, was minimal on Sunday, with only two oil product tankers approaching the narrow passage. However, the Joint Maritime Information Center said the southern shipping lane coordinated by Oman continues to remain operational.
The latest escalation has also weakened hopes for diplomatic progress. Iran’s Parliament Speaker and chief negotiator Mohammad Bagher Ghalibaf declared that the “era of one-sided deals is over,” insisting that Washington must first honour previous commitments on Hormuz transit and the normalisation of Iranian oil exports before negotiations can resume.
US President Donald Trump, on the other hand, declared the ceasefire “over” but maintained that the US remains open to further talks.
Iranian media also reported explosions near Bandar Abbas, close to the Strait of Hormuz, over the weekend. Tehran retaliated with drone and missile attacks targeting American allies across the Middle East, including Kuwait, Jordan and Qatar.
The strike on a Kuwaiti oil drilling facility marked the first direct attack on oil infrastructure in several weeks. Analysts warn that if the conflict expands to target energy facilities across the region, crude oil prices could potentially climb toward the $100-per-barrel mark.
(With inputs from Bloomberg)
Disclaimer: This story is for educational purposes only. Please consult with an investment advisor before making any investment decisions.
