Oil prices climbed more than 2 per cent on Monday, with Brent crude rising above $90 per barrel after renewed military exchanges between the United States and Iran intensified concerns over oil supplies from the Gulf.
Brent, the international benchmark, rose 2.5 per cent to $90.26 a barrel, while West Texas Intermediate (WTI) gained 2.5 per cent to $85.51.
The latest increase came after the United States said it had attacked Iranian rocket launchers on a small island in the Strait of Hormuz, marking its first strikes on Iran in about a month.
Iran subsequently retaliated by attacking US military targets in Jordan, further raising concerns that the conflict could escalate across the region.
US President Donald Trump also warned Monday that Washington would respond to Iranian attacks against US targets in the Middle East.
Hormuz Disruption Raises Oil Concerns
The latest military exchanges came as the US-Iran conflict reached its six-month mark, with hopes of a lasting peace agreement appearing increasingly uncertain.
The situation has renewed concerns over the Strait of Hormuz, a critical global energy route through which about a fifth of the world’s crude oil and gas normally passes.
The waterway has been largely closed amid the conflict, raising fears that prolonged disruption could tighten global energy supplies and push prices higher.
Quintex Intel analyst Stephen Innes said the latest developments showed how quickly geopolitical risk could return to the oil market.
He noted that physical flows through Hormuz had previously improved, allowing crude prices to give up some of their earlier risk premium, but warned that the latest military exchanges showed how fragile that progress remained.
Stocks Under Pressure
The renewed tensions also weighed on global financial markets, while investors continued to assess signals from the US Federal Reserve about interest rates.
Wall Street stocks fell at the start of Monday’s trading, with the Dow Jones Industrial Average down 0.5 per cent, the S&P 500 falling 0.3 per cent and the Nasdaq Composite declining 0.2 per cent.
Asian markets were mixed, while European stocks also showed divergent performances. Paris edged higher, Frankfurt declined and London remained closed for a public holiday.
Briefing.com analyst Patrick O’Hare said the negative sentiment in US equity futures was partly linked to the weekend military exchanges between Washington and Tehran, alongside higher US government bond yields.
Fed Rate Decision in Focus
Investors are also watching inflation and monetary policy after Federal Reserve official Kevin Warsh made hawkish comments at the Jackson Hole symposium.
US inflation is currently around 3.7 per cent, significantly above the Federal Reserve’s 2 per cent target.
Warsh described the inflation level as concerning and said he would be hard-pressed to characterise current financial conditions as restrictive, comments that increased expectations of possible interest-rate hikes.
However, he stopped short of committing to a rate increase.
“I stand here today committed to a discipline, not to a decision.”
Markets will now focus on key US economic data due over the next two weeks, including employment figures and the consumer price index, ahead of the Federal Reserve’s next policy decision.
Key Market Figures
- Brent crude: Up 2.5% at $90.26 per barrel
- WTI: Up 2.5% at $85.51
- Dow Jones: Down 0.5% at 53,293.52
- S&P 500: Down 0.3% at 7,691.49
- Nasdaq: Down 0.2% at 26,357.81
- CAC 40: Up less than 0.1%
- DAX: Down 0.7%
- Nikkei 225: Down 0.1%
- Hang Seng: Down 0.1%
- Shanghai Composite: Up 0.9%
The renewed rise in crude prices highlights the sensitivity of global energy markets to developments in the Middle East, particularly any threat to oil and gas shipments through the Strait of Hormuz.
Source: AFP.
