Oil Surges 3.5% as US-Iran Military Escalation Threatens Strait of Hormuz

Oil markets jolted upward on Monday morning as fresh military strikes between the United States and Iran sent traders scrambling to price in the risk of disrupted supplies through one of the world's most critical shipping lanes. Brent crude, the international benchmark, climbed $3.15 to settle at $91.25 a barrel—a gain of 3.58 percent. West Texas Intermediate, the US standard, rose $2.96 to $86.36, up 3.55 percent. The moves reflected a straightforward calculation: American forces had struck two missile launchers on Iran's Larak Island in the Strait of Hormuz on Sunday, Tehran had announced retaliatory attacks on US air bases in Jordan, and the world's oil traders were now weighing what came next.

This was the first known American military action against Iran since late July, and it arrived at a moment when the strait—the narrow waterway between Iran and Oman through which roughly one-fifth of global oil supplies flow—was already under strain. Shipping data told the story plainly: the number of commercial vessels transiting the strait had fallen to just five per day over the weekend, a sharp drop that reflected the caution of operators who feared their ships might become targets. On Saturday, a tanker had been struck by a projectile while entering the waterway, according to the United Kingdom Maritime Trade Operations agency. The message was clear: the corridor was becoming more dangerous.

President Trump amplified the sense of escalation with a social media post claiming that Iran's Kharg Island energy hub was being "blown to smithereens." The post included an AI-generated video but offered no substantiation, and there was no independent evidence the island was under attack. Still, the statement signaled American intent and kept markets on edge. Giovanni Staunovo, an analyst at UBS, captured the market's immediate concern: renewed military strikes in the Middle East, combined with fears of further oil supply disruptions, had pushed prices higher. The real question now, he said, was whether the situation would de-escalate or spiral further.

The broader context made the stakes clear. The Strait of Hormuz had been a flashpoint since late February, when the conflict began. Negotiations to reopen the waterway and restore normal shipping had stalled. Scott Bessent, the US Treasury Secretary, told Reuters on Sunday that the United States planned to impose new secondary sanctions on Iran every week—a signal that Washington intended to maintain and intensify economic pressure regardless of military developments. These sanctions would likely further complicate Iran's ability to export oil and would reinforce the supply concerns driving prices up.

Yet for all the Monday morning surge, the broader picture remained mixed. Both Brent and WTI were still tracking toward modest losses for August after falling more than 4 percent the previous week—their first weekly decline in three weeks. The volatility reflected genuine uncertainty about the trajectory of the conflict and its economic consequences. Trump also announced that oil secured through a new deal with Venezuela would be used to replenish the US Strategic Petroleum Reserve, which had fallen to near its lowest level in 44 years. That move suggested the administration was thinking about supply security on multiple fronts, hedging against further disruptions. What traders were really watching, though, was the Strait of Hormuz—whether those five daily vessels would become fewer still, or whether some fragile equilibrium might hold.