Oil prices surged sharply on Monday as tensions in the Middle East intensified and the strategically crucial Strait of Hormuz remained shut, with disruptions now exceeding 70 days. The ongoing conflict has escalated further after US President Donald Trump rejected Tehran's response to Washington's peace proposal, and Iran issued fresh threats of violence in the Strait of Hormuz, reigniting fears over global energy supply routes.
Brent and WTI Prices Climb
Brent crude, the international benchmark for oil, climbed 2.69% to $104.01 a barrel for July delivery. Meanwhile, the US benchmark West Texas Intermediate (WTI) rose 2.54% to $97.84 a barrel. The rally came as hopes for an imminent end to the 10-week-long US-Iran conflict faded.
Trump Rejects Iran's Response
On Sunday, Trump described Iran's response to a US-backed peace proposal as 'unacceptable,' effectively dampening expectations of breakthrough talks that could have restored stability to oil flows through the strategic Strait of Hormuz. Attention has now shifted to Trump's upcoming visit to Beijing on Wednesday, where he is scheduled to meet Chinese President Xi Jinping. US officials have indicated that discussions are expected to focus on trade ties between the two nations and the Iran situation.
Market Focus on Trump's China Visit
'Market attention now shifts squarely to President Trump’s visit to China this week,' IG market analyst Tony Sycamore said in a note. 'There is hope he can persuade Beijing to leverage its influence over Iran to push for a comprehensive ceasefire and a resolution to the ongoing disruption in the Strait of Hormuz.'
Supply Concerns and Saudi Aramco Warning
Adding to supply concerns, Saudi Aramco chief executive Amin Nasser warned on Sunday that the global market has already lost around one billion barrels of oil over the past two months. He cautioned that even if supply normalizes, energy markets would take time to stabilize.
Shipping Data Raises Concerns
Meanwhile, shipping data from Kpler indicated that at least two crude-laden tankers crossed the Strait of Hormuz last week with their tracking systems switched off. This growing tactic aims to avoid potential Iranian attacks and keep Middle East oil exports moving despite heightened risks.
Volatility Continues
Oil prices have continued to be volatile since the US and Israel launched joint strikes on Iran. In retaliation, Tehran tightened its noose on the strategically crucial Strait of Hormuz, the world's oil pipeline that carries 20% of global energy supplies. The situation remains fluid, with markets closely watching diplomatic efforts and potential disruptions to supply.
