Oil prices surged over 2.5% on Monday as renewed military clashes between the U.S. and Iran reignited fears of global crude supply disruptions, marking the sixth month of ongoing regional conflict. Brent crude futures jumped $2.39, or 2.71%, to settle at $90.49 a barrel after hitting a multi-week peak of $91.52, while U.S. West Texas Intermediate (WTI) crude gained $2.36, or 2.83%, to reach $85.76. The market rally followed overnight missile strikes by Iran targeting U.S. air bases in Jordan—retaliation for a previous attack on Iran’s Larak Island—prompting U.S. President Donald Trump to promise immediate retaliation.
Geopolitical friction intensified further after social media posts from President Trump fueled speculation regarding attacks on Iran’s critical energy hub at Kharg Island. Iranian officials denied any disruption to Kharg Island operations, while U.S. Vice President JD Vance described the communications as a strategic message to Tehran. Meanwhile, diplomatic efforts to reopen the vital Strait of Hormuz remain stalled, with shipping tracking data showing commodity vessel transits dropping to just five per day over the weekend. Analysts noted that while some Gulf crude continues to navigate the waterway, direct military exchanges have forced energy traders to price in a substantial geopolitical risk premium.
To cushion potential supply shortfalls and address declining domestic reserves, Washington is weighing diplomatic and trade leverage. U.S. Treasury Secretary Scott Bessent stated that economic sanctions are intended to force Tehran back to the negotiating table. Concurrently, President Trump indicated that crude sourced via pending energy agreements with Venezuela would be directed toward replenishing the U.S. Strategic Petroleum Reserve, which recently drew down by 3.1 million barrels to 286.6 million barrels—approaching its lowest inventory level in 44 years. Major international energy firms, including Chevron, GE Vernova, ONGC, Eni, and GeoPark, are currently finalizing deals to expand production projects in Venezuela.
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