Oil Prices Surge Amid Escalating Iran-US Tensions and Strait of Hormuz Concerns

Oil prices soared sharply on Monday as the Middle East was once again embroiled in chaos. Crude prices jumped 4% as fresh military action between Iran and the United States fuelled concerns over the security of the Strait of Hormuz, a key global energy route. As of 7:30 am, Brent crude was up 4.28% at $79.26 a barrel, while WTI crude rose 4.37% to $74.53 a barrel.

The spike came after Tehran expanded its strikes to Qatar and the United Arab Emirates over the weekend, while the United States carried out another round of attacks on Iran. The exchanges marked the latest escalation in the conflict centred around shipping through the Strait of Hormuz. Although US President Donald Trump on Sunday said that commercial traffic was continuing through the strait, Iran had earlier announced that it had closed the waterway after a vessel travelling on an unapproved route was struck. Shiptracking data from Kpler showed that only six vessels passed through the strait on Sunday, the fewest in five weeks.

The renewed hostilities have also clouded the future of the interim US-Iran agreement signed last month, which was aimed at reopening the strait and ending the conflict after another 60 days of negotiations. On the energy front, the International Energy Agency had said in its monthly report that global oil supply increased by 4.1 million barrels per day in June following the agreement, although output remained 9.4 million barrels per day below pre-war levels.

As the fighting intensified, Iran's ministry of foreign affairs issued a strong condemnation of the latest US military strikes, calling them a "flagrant violation" of the UN Charter and accusing Washington of breaching a ceasefire agreement while undermining regional stability. The ministry warned that any country permitting its territory or facilities to be used for military operations against Iran could itself become a target of Iranian defensive action. "The territory or facilities of any country used to launch military attacks against Iran may be regarded as the origin of aggression and treated as a legitimate target for defensive operations by the Iranian armed forces," the ministry said.

Iran also dismissed remarks attributed to the US President about recent talks held in Muscat, describing them as "a complete lie." According to Tehran, the discussions were limited to arrangements concerning the management of the Strait of Hormuz and the security of international shipping routes. The ministry criticised what it called the inadequate response of the UN Secretariat to the US military action and urged UN Secretary-General Antonio Guterres and the UN Security Council to hold those responsible accountable, maintaining that the strikes violated international law and the UN Charter.

The diplomatic statement followed fresh US military action on Sunday. According to US Central Command (CENTCOM), the operation was intended to further degrade Iran's ability to target civilian mariners and commercial vessels transiting the Strait of Hormuz. Iran's Press TV reported that explosions were heard in the southern cities of Jask, Bandar Abbas and Sirik after the operation. US forces had earlier struck around 140 Iranian military targets on Saturday using precision munitions launched from land- and sea-based fighter aircraft, drones and naval vessels. The targets included missile and drone sites, naval capabilities, ammunition storage facilities, communication networks and coastal surveillance locations. Earlier, UN Secretary-General Antonio Guterres expressed deep concern over the renewed military confrontation involving Iran and the United States, warning that the escalation could have severe regional and global consequences.