- Brent crude climbed above $90 amid escalating U.S.-Iran hostilities.
- Strait of Hormuz disruption fears lifted global oil supply concerns.
- WTI rose as geopolitical tensions increased energy market volatility.
- Markets monitored tanker traffic and potential supply disruptions closely.
Brent crude surged above $90 per barrel on Monday, reaching its highest level in five weeks after renewed military exchanges between the United States and Iran intensified concerns that oil shipments through the Strait of Hormuz could face prolonged disruption.
Brent futures were trading at $90.56 per barrel by mid-morning, up about 2.8% from the previous session’s close of $88.10, after touching an intraday high of $91.41. U.S. benchmark West Texas Intermediate (WTI) crude rose 2.4% to $84.49 per barrel, reflecting stronger geopolitical risk premiums in internationally traded crude markets.
The latest rally followed a ninth consecutive day of U.S. military strikes against Iran and renewed Iranian retaliation, prompting traders to reassess supply risks in one of the world’s most strategically important energy corridors.
Strait of Hormuz Returns to the Center of Oil Markets
The Strait of Hormuz has once again become the primary focus for global energy markets as military tensions increase across the Gulf.
According to the U.S. Energy Information Administration (EIA), approximately 20 million barrels of crude oil and petroleum products per day passed through the Strait of Hormuz in 2024, representing about 20% of global petroleum liquids consumption. The narrow waterway connects Gulf oil producers with international markets, making it the world’s most critical oil shipping chokepoint.
Any prolonged disruption could affect exports from major producers including Saudi Arabia, Iraq, Kuwait, the United Arab Emirates and Iran, tightening global supplies and increasing transportation costs.
Iran said the ceasefire with the United States had effectively collapsed following the latest exchanges and declared it would take “appropriate action” to defend its national interests, raising concerns that further escalation could threaten commercial shipping.
Brent-WTI Spread Highlights U.S. Supply Buffer
The roughly $6 per barrel premium of Brent over WTI underscored the different pressures facing international and U.S. oil markets.
Brent reflects global crude supplies, particularly from the North Sea and Middle East, making it more sensitive to geopolitical disruptions affecting international shipping routes.
WTI, by contrast, is supported by robust U.S. shale production centered in regions such as the Permian Basin, providing American refiners with greater access to domestic supplies.
The EIA has previously noted that while expanding U.S. production helps moderate domestic fuel price increases, sustained rises in global benchmark prices eventually filter through to gasoline, diesel and aviation fuel costs.
If Brent remains above $90 for an extended period, higher transportation and energy costs are likely to feed into broader inflation across importing economies.
Rising Oil Prices Revive Inflation Concerns
The renewed increase in crude prices has shifted investor attention back toward inflation after several months of easing price pressures in major economies.
Higher oil prices increase production, freight and utility costs, potentially slowing progress toward central bank inflation targets. Markets have already begun reassessing interest-rate expectations as investors evaluate whether energy-driven inflation could delay future monetary easing.
An unusual feature of Monday’s trading was the decline in gold prices despite heightened geopolitical tensions. Normally viewed as a safe-haven asset, gold weakened as investors focused more on the inflationary implications of rising energy costs and higher bond yields than on traditional risk-off positioning.
Markets Watch Diplomacy as Volatility Returns
Oil markets had traded below $90 for much of the past several weeks amid mixed demand signals from China and stable OPEC+ production policy. The latest military escalation abruptly reversed that trend, producing the largest daily gains in Brent and WTI prices in weeks.
The return of Brent crude above $90 signals that geopolitical risks have once again become a dominant driver of global energy markets. Although ample production capacity outside the Gulf offers some cushion, the Strait of Hormuz remains indispensable to global oil trade, leaving prices highly sensitive to any disruption in the region.
In the coming weeks, investors, policymakers and energy companies will closely watch military developments, tanker traffic and diplomatic engagement for signs of whether supply risks begin to ease or whether the conflict evolves into a more prolonged threat to global energy security.
