Oil prices extended gains on Monday as tit-for-tat strikes between the U.S. and Iran on vessels sailing in the Strait of Hormuz and other areas heightened concerns of a prolonged supply disruption from the Middle East.
Brent crude futures climbed 52 cents, or 0.54%, to $96.80 a barrel by 2354 GMT while U.S. West Texas Intermediate crude was at $92.14 a barrel, up 66 cents, or 0.72%.
Brent rose 7.8% last week while WTI gained nearly 10% after the U.S. and Iran resumed attacks and caused a reduction in oil flows through the Hormuz strait where a fifth of the world’s oil supply used to transit.
U.S. forces struck three Iranian oil tankers on Saturday, U.S. Central Command said, including one off the coast of Kharg Island, near Iran’s key oil export hub.
The navy of Iran’s Islamic Revolutionary Guard Corps said on Saturday it targeted three oil tankers that were travelling through unauthorized routes in the Strait of Hormuz as well as three additional U.S. vessels in other areas.
The Saturday attacks represented a “major escalation in the maritime conflict”, maritime intelligence firm Marisks said.
“Commercial tankers are now being deliberately used as instruments of reciprocal economic pressure, substantially weakening the previous distinction between military confrontation and commercial shipping,” it added.
An average of 10 commodity ships transited the Strait of Hormuz per day over the past 10 days, the lowest since May, data from analytics firm Kpler showed on Monday.
A restricted zone will be announced outside the Strait of Hormuz in coming days, Mohsen Rezaei, the secretary of Iran’s Supreme National Security Council, said on Sunday, according to state media.
OPEC+ kept its oil output policy unchanged for October at a meeting on Sunday, the producer group said in a statement, as it needs to agree new quotas before deciding its next output steps.
A prolonged standoff, punctuated by calibrated military action by the U.S. and Iran, appeared to be the most likely scenario and was likely to delay the path to full recovery of Middle East supply, ANZ analysts said in a note.
“We then expect exports to remain constrained through the rest of 2026, before a gradual reopening late in Q4 2026,” they said, adding that a return to pre-war throughput is not expected until late first quarter or early second quarter of 2027.
(Reporting by Florence Tan; editing by Lincoln Feast.)