Oil Prices Surge Above $90 as U.S.-Iran Conflict Disrupts Gulf Shipping and Raises Supply Concerns

BY COMFORT OGBONNA

Oil prices climbed sharply on Monday, with Brent crude rising above $90 per barrel as escalating tensions between the United States and Iran disrupted shipping activity through the strategically important Strait of Hormuz and increased fears of potential supply shortages in global energy markets.

Brent crude futures rose $2.09, or 2.37%, to $90.19 per barrel by 0241 GMT, reaching their highest level since June 11. The move extended a powerful rally from the previous week, when Brent gained 15.9% — its largest weekly increase since April — as investors reacted to growing concerns that military tensions in the Middle East could threaten oil flows.

U.S. West Texas Intermediate crude also advanced, rising $1.71, or 2.07%, to $84.20 per barrel. The benchmark reached its highest level since June 12 after posting a 15.5% weekly gain, marking its strongest weekly performance since early March.

The latest surge in energy prices came after the conflict between Washington and Tehran intensified over the weekend. The United States carried out a ninth consecutive night of attacks against Iran, while U.S. allies Kuwait and Bahrain reported additional Iranian strikes, increasing concerns that the conflict could spread further across the Gulf region.

Analysts at ING said Brent crude’s move above $90 reflected the lack of progress toward reducing tensions in the region. They warned that continued exchanges of military strikes between the United States and Iran could create a wider conflict, potentially leading to large-scale disruptions throughout the Gulf.

“If this escalation goes unchecked, we could return to an environment of wide-scale attacks across the Gulf,” the analysts said, highlighting the risks facing one of the world’s most important energy-producing regions.

The Strait of Hormuz has become a major focus for energy markets because it handles roughly one-fifth of global oil trade. Any prolonged disruption to shipping through the narrow waterway could significantly affect crude supplies and push prices higher.

The Islamic Revolutionary Guard Corps said Monday that two oil tankers had exploded and become immobilized after attempting to travel through what it described as an unsafe southern route through the Strait of Hormuz. The group claimed the vessels had been encouraged by the U.S. military to use the passage, although the details of the incident could not be independently confirmed.

Shipping activity in the region has become increasingly uncertain as both sides have targeted maritime operations. The United States has said it is enforcing restrictions on Iranian ports, while Iran has warned that it will take action against vessels it believes are violating its rules for navigating the Strait of Hormuz.

Adding to market concerns, the United Kingdom Maritime Trade Operations agency reported that a vessel was on fire northwest of Oman’s Kumzar early Monday. The incident further increased fears among traders that commercial shipping risks in the region could worsen.

Barclays analyst Amarpreet Singh said investors would gain a clearer understanding in the coming days and weeks about how much oil the region can continue exporting under the current conditions. He warned that oil markets may still be underestimating the potential impact on global inventories.

According to Singh, current oil inventories are already tighter than they were at the beginning of the conflict, leaving markets more vulnerable to unexpected supply disruptions.

Shipping data showed that traffic through the Strait of Hormuz had slowed. Four vessels crossed the waterway on Sunday, compared with eight the previous day, according to shipping data. Since Friday, at least three oil product tankers and one very large crude carrier have entered the strait to load oil.

The slowdown in shipping activity has fueled concerns that prolonged restrictions could create further pressure on global energy supplies. Traders are closely monitoring whether the conflict will lead to broader disruptions involving major oil producers in the Middle East.

The rise in crude prices also presents challenges for governments and central banks worldwide. Higher energy costs can increase inflation by raising expenses for transportation, manufacturing, and consumer goods, potentially complicating efforts by policymakers to lower interest rates.

Investors are now watching developments in the Gulf closely, as any further escalation could have significant consequences for oil markets, global inflation trends, and economic growth. For now, uncertainty surrounding shipping routes and military activity remains the key driver behind the latest surge in energy prices.