Brent Crude Surpasses $97 as US-Iran Tensions Escalate in Strait of Hormuz

Oil prices rose on Monday, with Brent crude futures surpassing $97 a barrel, as military confrontations between the United States and Iran in the Strait of Hormuz intensified fears of a significant supply disruption through the world's most important oil chokepoint.

As of 1:49 a.m. ET, Brent crude futures for November delivery were up 1.4% at $97.58 per barrel, while West Texas Intermediate (WTI) crude futures climbed 1.3% to $92.69. The gains follow a sharp rally last week that saw Brent rise 8% and WTI jump nearly 10% as shipping traffic in the strait declined.

Military Exchanges Fuel Supply Jitters

The latest surge in prices follows a series of direct military actions over the weekend. The U.S. military reported that it struck three Iranian oil tankers on Saturday after Iranian forces allegedly fired ballistic missiles at a U.S. Navy vessel.

In response, Iran claimed to have attacked a U.S. naval drone and warned of a more forceful retaliation against any further American military action, according to its state-run Press TV. Iranian officials also announced plans to establish new maritime restriction zones outside the strait, potentially sanctioning vessels that enter.

Market Analysis

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The Strait of Hormuz is a vital artery for the global energy market, with approximately one-fifth of the world's daily oil consumption passing through the waterway. The escalating conflict raises the risk of a severe bottleneck for crude shipments.

"The oil market remains well supported with little sign of a peaceful resolution between the U.S. and Iran for now," analysts at ING noted in a report. However, they added a note of caution, stating that "despite the escalating situation, oil supplies are still flowing." The U.S. Energy Secretary confirmed that, with the help of U.S. Navy escorts, the daily flow of oil through the strait currently stands at just over 9 million barrels.

OPEC+ Holds Production Steady

The geopolitical tensions coincide with a decision from OPEC+ to maintain its current oil production levels for October. The producer group, which met on Sunday, paused a six-month trend of output increases to focus on establishing new production quotas for 2027, according to a statement released after the meeting.