Oil prices jump over 4% on Monday

Oil prices rose more than 4 per cent on Monday as renewed military strikes between the United States and Iran heightened concerns over energy shipments through the Strait of Hormuz.

Brent crude futures gained $3.10, or 4.08 per cent, to $79.11 a barrel by 0325 GMT, while US West Texas Intermediate crude climbed $2.95, or 4.11 per cent, to $74.36 a barrel.

The gains followed fresh US strikes on dozens of Iranian targets on Sunday. At the same time, Iran’s Revolutionary Guards said they launched attacks on US military bases in Kuwait and Bahrain on Monday.

The Strait of Hormuz, through which around 20 per cent of the world’s oil and liquefied natural gas passed before the war began at the end of February, remains under threat despite US President Donald Trump saying it is open to commercial traffic. Iran had earlier declared the waterway closed after a vessel allegedly travelled on an unapproved route and was struck.

According to ship-tracking data from Kpler, only six vessels transited the strait on Sunday, the lowest number in five weeks.

The latest escalation has also raised doubts over the future of a US-Iran interim agreement signed last month to reopen the strait and end the conflict following further negotiations.

The International Energy Agency said global oil supply increased by 4.1 million barrels per day in June but remained 9.4 million barrels per day below pre-war levels. Analysts at ANZ said hopes for a quick resolution had faded after the weekend’s escalation, while IG analyst Tony Sycamore said the relatively modest rise in prices suggested markets still viewed the situation as an escalation within a fragile truce rather than a complete breakdown of the ceasefire.

Attribution: Reuters