Oil rises as renewed military strikes fuel fears over Strait of Hormuz supplies

Oil prices climbed more than 2% on Monday after renewed military strikes between the United States and Iran revived concerns over disruptions to energy shipments through the Strait of Hormuz, one of the world's most critical oil export routes.

Brent crude futures rose $1.67, or 2.2%, to $77.68 a barrel by 09:55 GMT, while US West Texas Intermediate (WTI) crude gained $1.59, or 2.23%, to $73.00 a barrel.

"The market's focus will remain on the number of oil tankers heading into the region because a decline could eventually affect production," said Giovanni Staunovo, commodity analyst at UBS. "That is why we continue to see a geopolitical risk premium supporting prices, alongside the risk of supply disruptions."

Fresh military escalation heightens supply concerns

Military exchanges between the United States and Iran over the weekend intensified fears of a broader escalation in the region.

Tehran announced that it had targeted US facilities across several Gulf states on Sunday and reaffirmed the closure of the Strait of Hormuz. On Monday, Iran's Revolutionary Guard said it had carried out attacks on US military bases in Kuwait and Bahrain.

Before the outbreak of the war in late February, around 20% of the world's daily oil and liquefied natural gas supplies passed through the Strait of Hormuz.

Shipping traffic slows

ANZ analysts said shipping companies are exercising greater caution in response to the deteriorating security situation, leading to slower traffic through the waterway.

Ship-tracking data showed that traffic through the Strait of Hormuz fell on Sunday to its lowest level in five weeks, with only six vessels passing through the strait, according to data from Kpler.

The latest escalation has also cast doubt over the future of the temporary agreement between the United States and Iran, signed last month to reopen the strait and end the conflict following an additional 60-day negotiation period.

Although Iran announced the closure of the strait after a vessel was reportedly targeted for sailing through an unauthorized route, US President Donald Trump insisted that the Strait of Hormuz remains open to commercial shipping.

Goldman Sachs: Pipeline expansion could reduce risks

Goldman Sachs estimates that the expansion of pipeline infrastructure across the Middle East could allow more than 60% of Gulf oil exports that previously relied on the Strait of Hormuz before the war to bypass the waterway by the end of 2028.

The bank expects alternative pipeline capacity to increase by 3.8 million barrels per day by the end of 2027, followed by an additional 7.3 million barrels per day by the end of 2028, lifting total bypass capacity to more than 14 million barrels per day.

Other market developments

• Floating storage of Iranian crude increased after Tehran boosted exports during the temporary ceasefire with the United States. However, sales have since slowed as independent Chinese refiners shifted toward cheaper crude supplies from Iraq, the UAE, and Qatar.

• Abu Dhabi National Oil Company (ADNOC) set the official selling price for August Murban crude at $80.01 a barrel, compared with $101.48 for the previous month.

• In a separate development, Ukraine's Security Service announced an attack on an oil storage facility in Russia's Stavropol region, as well as three oil storage tanks at the Port of Kavkaz in Russia's southern Krasnodar region.