International oil prices climbed again on Monday as military clashes between the United States and Iran over control of the Strait of Hormuz intensified, with Brent crude briefly topping $86 a barrel. The market is increasingly pricing in the risk of actual supply disruptions from the key Middle East shipping route.
Prices edge higher amid prolonged conflict fears
September Brent crude futures on ICE settled at $84.95 a barrel, up 0.26% from the previous session, after hitting an intraday high above $86. August West Texas Intermediate (WTI) crude on the New York Mercantile Exchange closed at $79.60, a 0.33% gain. Both benchmarks pared gains in afternoon trading but remained in positive territory.
The direct catalyst was the prolonged military confrontation. The US has struck Iranian military facilities for five consecutive days, with the latest attack occurring during daylight hours. Washington also reinstated a blockade on Iranian coastal vessels transiting the Strait of Hormuz starting Sunday at 4 p.m. local time. In response, Iran vowed strong retaliation and declared holding the strait as its top military priority.
Strategic chokepoint at risk
The Strait of Hormuz is a strategic chokepoint through which a significant portion of the world's crude oil and liquefied natural gas flows. Any disruption or restriction to traffic there would delay Middle Eastern oil exports, with ripple effects on energy prices across Asia, Europe and beyond. Analysts say expectations of a quick normalization are premature.
Saul Kavonic, senior energy analyst at MST Marquee, warned that if the current level of hostilities continues for several weeks, oil prices could test the $100 a barrel level again. An escalation targeting major regional oil infrastructure could push prices even higher. The current price action signals that geopolitical risk is being fully repriced into energy markets, with the future trajectory depending on the intensity of US-Iran clashes, actual shipping disruptions, and the safety of key oil facilities in the Middle East.