Oil Prices Surge Over 3% as Iran Declares Strait of Hormuz Closed

Oil prices surged more than 3% in Asian trading on Monday after Iran declared the Strait of Hormuz closed, escalating regional tensions and stoking fears of a significant disruption to global crude supplies.

Geopolitical Tensions Boil Over

The price spike followed a weekend of heightened conflict between the U.S. and Iran. Tehran reportedly expanded missile and drone attacks to include Gulf states such as Qatar and the United Arab Emirates as retaliation for U.S. military strikes.

Citing a strike on a commercial vessel, Iranian authorities announced the closure of the Strait of Hormuz, one of the world's most critical energy chokepoints. The U.S. has disputed Iran's claim, with President Donald Trump stating that commercial shipping lanes remain open under the protection of the U.S. military. Despite these assurances, shipping activity in the region reportedly slowed over the weekend.

Market Reaction

The renewed geopolitical risk sent key oil benchmarks higher, building on gains of over 4% from the previous week.

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• Brent crude futures for September delivery rose 3.2% to $78.46 per barrel.
• West Texas Intermediate (WTI) crude futures climbed 3.4% to $73.83 per barrel.

A Critical Supply Chokepoint

The Strait of Hormuz is the primary export route for major oil producers including Saudi Arabia, Iraq, Kuwait, and the United Arab Emirates. Any sustained closure or disruption could significantly tighten global oil supplies and force refiners, particularly in Asia, to seek more expensive alternative sources.

Market participants are now closely watching for any potential coordinated response from major oil producers or the possibility of strategic petroleum reserve releases to offset supply fears. The developments have reintroduced a significant geopolitical risk premium into oil prices after a period of relative calm.