Oil prices rose to six-week highs on Monday, 7 September, as military exchanges between the United States and Iran raised the prospect of further disruption to shipping and energy supplies through the Strait of Hormuz.
Brent crude futures gained US$1.03, or 1.1 per cent, to settle at US$97.31 a barrel. The benchmark earlier reached US$98.06, its highest level since 24 July. US West Texas Intermediate crude rose US$1.17, or 1.3 per cent, to US$92.65 a barrel by 1.45 pm EDT, after earlier reaching US$93.29, also its highest point since 24 July.
The rise follows a sharp move last week, when Brent added around 8 per cent. WTI gained nearly 10 per cent after the US and Iran resumed attacks. The immediate issue for markets is the security of vessels using the Strait of Hormuz, a major route for global oil shipments, and the risk that military action could affect production facilities or transport.
Washington and Tehran exchanged strikes over the weekend for the first time in about a month. The two sides targeted oil tankers and warships, while Iran fired missiles and drones at US air bases in Jordan and the United Arab Emirates.
The US said it struck Iranian targets in the Strait of Hormuz after Tehran carried out overnight attacks on ships travelling through the waterway. On Sunday, the US targeted Iranian rocket launchers that it said were preparing to send mines into the strait.
Two oil supertankers were hit by projectiles late Monday as they attempted to leave the Strait of Hormuz. On Tuesday afternoon, the US launched a fresh wave of strikes against targets in Iran.
Iran has said it would attack energy infrastructure across the Middle East if the US carries out further strikes against Iranian assets. Iranian Parliament Speaker Mohammad Baqer Qalibaf said on Monday: 'Strike our assets and you get struck'
US Defence Secretary Pete Hegseth said Tehran's oil fleet was 'defenceless'. President Trump said the US naval blockade of Iranian ports was putting pressure on the country, while adding that he had no timeline for resolving the conflict.
Goldman Sachs said oil could rise as high as US$120 a barrel if attacks on shipping increase. That outcome would depend on the scale and duration of any disruption, which remains unclear.
The International Energy Agency has already warned of tighter supplies. In its monthly report released on 12 August, the agency said global oil inventories would fall in Q3 at twice the rate it had previously estimated because of continuing disruption from the US-Iran war.
There are no specific damage assessments for energy facilities, and it is unclear how long any supply disruption may last. The market's recent gains reflect the risk to shipping and production rather than a confirmed account of losses at named facilities.
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