Oil Prices Climb as Hormuz Reopening Doubts Linger, Houthi Attacks Stoke Supply Fears

Oil prices extended gains on Monday, driven by persistent uncertainty over the reopening of the critical Strait of Hormuz shipping lane and new geopolitical risks following attacks on Saudi Arabian energy infrastructure.

As of 20:37 ET, Brent crude futures rose 1.1% to $84.45 a barrel, building on a rally that has seen the global benchmark climb more than 5% over the past three sessions. West Texas Intermediate (WTI) crude futures gained 1.2% to trade at $78.18 a barrel.

Hormuz Reopening Remains Uncertain

Market sentiment remains focused on diplomatic efforts to reopen the Strait of Hormuz. Over the weekend, Iranian Foreign Minister Abbas Araghchi stated that an agreement with Oman to establish a shipping route was "very close," according to Investing.com. However, he cautioned that any deal would not immediately reopen the strait, tempering hopes for a swift resumption of normal energy flows.

Tehran has reiterated several conditions for a full reopening, including the end of a U.S. naval blockade, the removal of sanctions, and compensation for war damages. The ongoing uncertainty has kept shipping activity constrained, underscored by an attack on an Abu Dhabi National Oil Co. (ADNOC) tanker in the strait over the weekend.

Geopolitical Risks Escalate

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Adding to supply-side fears, Iran-backed Houthi militants claimed responsibility for an attack on Saudi Arabia's Jazan refinery near the Red Sea. Saudi Arabia later confirmed that a fire at the Aramco-operated facility had been extinguished following the attack.

These developments stoke concerns that the regional conflict could widen beyond the Strait of Hormuz, threatening alternative shipping routes for Middle Eastern oil exports through the Gulf of Aden and the Red Sea. According to ANZ analysts, the oil market endured a volatile week, with prices recovering after an initial dip as it became clear that any reopening of Hormuz could face significant restrictions.

Broader Supply Context

While tensions are escalating in the Middle East, some supply risks have eased elsewhere. Ukraine has reportedly agreed not to target certain non-Russian oil tankers and Black Sea energy infrastructure. This development is crucial for Kazakhstan's crude exports, which amount to roughly 1.8 million barrels per day via the Caspian Pipeline Consortium terminal.