Oil jumps 5% as US-Iran strikes revive Strait of Hormuz fears

Oil prices surged nearly 5% on Monday following a weekend of intensified military exchanges between the United States and Iran, rekindling concerns over the security of the Strait of Hormuz. The international benchmark Brent crude climbed to approximately $80 a barrel by early Asian trading as both sides carried out new missile and drone strikes.

Iran's Closure Claim and US Response

Iran declared the strategic waterway, through which about one-fifth of the world's oil passes, closed "until further notice," though the US Central Command rejected the claim and insisted the strait remains open to commercial traffic . The US launched its latest wave of strikes on Sunday, targeting dozens of Iranian military sites including air-defence systems and coastal radar, in retaliation for an Iranian attack on a Cyprus-flagged container ship.

Regional Escalation and Market Impact

Iran's Islamic Revolutionary Guard Corps responded by striking US military bases in Kuwait, Bahrain, and other Gulf states, marking a significant widening of the conflict. The attacks have cast doubt over the future of the interim US-Iranian agreement signed last month, which had raised hopes for a reopening of the strait. Vessel traffic through the waterway has dropped sharply, with only six ships tracked crossing on Sunday, the lowest in five weeks.

Outlook for Oil Markets

The renewed hostilities have reversed the price declines triggered by last month's temporary ceasefire and diplomatic progress, with analysts warning of continued volatility. The International Energy Agency noted that global oil supply rebounded in June but remains nearly 10 million barrels per day below pre-war levels. While Brent remains below the peaks seen earlier this year, markets are pricing in the risk of extended disruption to the world's most vital energy chokepoint.