Oil Prices Spike Amid US-Iran Tensions in Strait of Hormuz

Global oil markets experienced a notable uptick on Monday, with Brent crude futures jumping 2.85% to trade at $90.61 per barrel. West Texas Intermediate (WTI) crude also saw gains, rising 2.55% to $85.53 per barrel. These increases are attributed to escalating tensions in the Middle East, specifically a US strike on two launchers on Iran’s Larak island in the Strait of Hormuz. This marked the first known American action against Iran since late July.

In a retaliatory move, Iran reportedly attacked two US air bases in Jordan, according to Iranian media citing the country’s Revolutionary Guards. Analysts suggest this could signal a new phase of escalation, with the duration uncertain. “Looks like we are in another escalation phase. How long that lasts is impossible to determine. Could be days, could be weeks,” stated IG market analyst Tony Sycamore.

Technical indicators suggest that a sustained rise in WTI prices above the $85.80-$85.90 resistance level could lead to further gains, potentially reaching recent highs. Meanwhile, negotiations aimed at resolving the broader conflict remain stalled, even as mediators work to reopen the vital Strait of Hormuz, a critical chokepoint for global oil transit.

Adding to the market’s volatility, the US Treasury indicated a potential for weekly secondary sanctions on Iran to further isolate the nation from the dollar-based financial system. Despite these tensions, increased oil flows through the Strait of Hormuz have somewhat tempered concerns over immediate supply disruptions, though shipping data indicates a cautious approach by vessels wary of potential attacks.

Source: https://www.monitor.co.ug/uganda/news/world/oil-prices-surge-after-us-attack-on-iran-s-larak-island-5576888