Global oil prices surged more than 3% in early Asian trading on Monday as escalating hostilities between the United States and Iran intensified fears of further disruption to energy shipments through the Strait of Hormuz.
Brent crude rose $2.75, or 3.12%, to $90.85 per barrel, while US West Texas Intermediate gained $2.56, or 3.10%, to $85.05 per barrel during the early session.
Brent later climbed to a one-month high of $91.42, while WTI touched $85.39, as traders priced in the risk of reduced crude oil and liquefied natural gas supplies from the Gulf. Prices subsequently reversed their gains after comments from Iran’s Foreign Ministry were interpreted as leaving open the possibility of renewed negotiations.
The early rally followed renewed US military action against Iran and Iranian retaliatory strikes across the region, raising concerns about the security of tankers and energy infrastructure.
Strait of Hormuz Disruption Raises Market Risk
The Strait of Hormuz is one of the world’s most important energy corridors, carrying about 20% of global oil and gas supplies under normal conditions.
Any prolonged disruption to traffic through the narrow waterway could tighten international energy supplies, raise transport costs and place further pressure on fuel prices.
Shipping activity through the strait has already declined sharply. Only four vessels crossed the route on Sunday, compared with eight a day earlier, according to shipping data cited by Reuters.
The reduction in tanker movements has increased uncertainty among oil traders, refiners and energy-importing countries that depend heavily on Gulf supplies.
Shipping and Insurance Costs Could Increase
Continued military activity around the strait could also increase maritime insurance premiums and freight charges for vessels operating in the region.
Shipowners may delay voyages, demand additional security guarantees or avoid high-risk areas, potentially adding to the cost of transporting crude oil and LNG.
Oil markets are expected to remain volatile as investors assess military developments, shipping movements and diplomatic efforts between Washington and Tehran.
The sharp intraday price swings demonstrate how quickly market sentiment can change in response to developments involving the Strait of Hormuz. While the prospect of negotiations eased prices later in the session, any renewed threat to shipping could restore the geopolitical risk premium.
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