Oil Prices Surge as US-Iran Hostilities Resume
Oil prices climbed above $90 a barrel on Monday morning after the United States and Iran exchanged strikes for the first time in a month, with Washington also signalling further economic pressure on Tehran's trading allies. Brent crude, the international benchmark, rose 5.5% to stand just below $91 a barrel, while West Texas Intermediate, the US gauge, gained 3.47% at $86.29, according to market data cited by International Business Times. The National reported Brent up 2.24%at $90.07 a barrel earlier in the morning.
Sunday's Strikes and Their Context
US forces hit Iranian rocket launchers on Larak Island near the Strait of Hormuz on Sunday, according to a US official cited by The National. The official said the Islamic Revolutionary Guard Corps was preparing to launch rockets carrying sea mines into the strait when US forces struck. US Central Command spokesperson Tim Hawkins told CNBC: "Last week, CENTCOM completed clearing sea mines from the strait's international shipping routes. S. forces are monitoring the area closely and remain prepared to protect the free flow of commerce through this essential waterway."
Iran responded with strikes on two US bases in Jordan, Iranian media reported. Jordan's military said eight missiles were intercepted over the kingdom. Iranian forces said they "destroyed the technical and repair infrastructure, as well as the enemy fighter deployment sites" and that a supertanker was disabled after hitting two naval mines, according to International Business Times. Iran's foreign ministry said the S. bears "full responsibility" for the escalation.
Trump's Threat and Oil Infrastructure
US President Donald Trump shared a post on Truth Social saying "Kharg Island being blown to smithereens," according to both The National and International Business Times. The National noted that Kharg Island, off Iran's south-western coast, handles about 90% of Iran's oil exports, with loading capacity estimated at 7 million barrels a day. International Business Times cited a figure of about 80% for the island's share of Iran's oil exports.
Escalating Economic Pressure
Treasury Secretary Scott Bessent told Reuters on Sunday that new secondary sanctions on Iran's trading partners would probably be unveiled on a weekly basis, as reported by The National. "We're starting with the banks, and we're telling the banks it's not okay to have Iranian money and to aid the regime," he said. Speaking to The Associated Press, Bessent said the administration plans to sanction another bank with ties to Tehran this week, describing the approach as "financial violence if we have to." He added: "We are showing people that we know who you are, you know who you are,and this has got to stop."
Bessent unveiled the plan, called "Operation Economic Outcast," last week, noting the US would impose secondary sanctions on those "enabling" Iran, according to International Business Times. The measures could affect Chinese banks, per Bessent, who said: "We want to make clear here today that no one is above the reach of S. sanctions." He rejected suggestions that the administration was being particularly cautious about Beijing, calling it a "completely false narrative that the media picked up on."
Market and Shipping Impact
Crude prices have swung sharply over six months of war, with Brent hitting an intraday high of about $126 a barrel in April before falling back, The National reported. Shipping through the Strait of Hormuz, which before the war carried about a fifth of the world's energy exports, has dropped in recent days amid concerns about an escalation in hostilities, according to the same report.