Oil prices shot up Monday with U.S.-Iran tensions flaring over the Strait of Hormuz,a key shipping lane. Brent crude surged over 4%, hitting $79.17 a barrel — highest since June 22.
U.S . military strikes on Iran aimed at reducing threats in the strait triggered the spike. U.S. Central Command (CENTCOM) said it targeted Iranian positions after accusing Iran of attacking the MV GFS Galaxy, a Cyprus-flagged ship.
CENTCOM stressed the strait's global trade importance, stating, "Iran does not control it." U.S. forces in the region aim to ensure commercial shipping freedom,countering what they call Iran's aggression.
Iran hit back with missile and drone strikes on Gulf states,including the UAE, Qatar,Kuwait,Oman,and Bahrain. The Persian Gulf Strait Authority warned that vessels not following its routes risked unsafe passage, holding operators responsible.
After a brief easing post a recent agreement, traffic in the strait plummeted . Windward data showed only six vessels crossed between Thursday night and Friday morning, down from 18-22 earlier in the month. This drop continued over the weekend, with nine crossings recorded.
Oil prices,settled somewhat after a June 17 deal, are now about 9% higher than before U.S.-Israeli strikes on Iran in February. Mukesh Sahdev of XAnalysts in Sydney expects Brent to stay in the upper $70s during August and September amid geopolitical tensions. He noted refiners are already shifting away from Middle Eastern oil.
Fabien Yip from IG in Sydney doubts prices will climb to earlier conflict highs. He said the recent jump shows market reaction to U.S.-Iran fragility. Yip added that while prices may stay up short-term, a big spike is unlikely due to slow demand and more oil from OPEC+ and stuck tankers.
Asian stock markets felt the heat too. Japan's Nikkei 225 dropped over 1% in morning trading . South Korea's Kospi fell more than 5%. Hong Kong's Hang Seng Index slipped about 0.2%.
