Global oil prices edged higher on Monday as U.S.-Iran military clashes undermined their fragile peace deal and renewed fears over oil flows through the Strait of Hormuz.
Brent crude futures climbed 45 cents, or 0.6%, to $72.44 a barrel by early morning GMT, while U.S. West Texas Intermediate rose 82 cents, a sharper 1.2% gain, to settle at $70.05 a barrel. The modest recovery belied a turbulent stretch for crude markets.
Brent had shed more than 10% last week alone, its third consecutive weekly decline, after a temporary uptick in oil shipments through the Strait of Hormuz briefly calmed nerves and convinced some traders that the worst might be behind them.
It wasn’t.
The Strait of Hormuz, the narrow waterway between Iran and the Arabian Peninsula through which roughly a fifth of the world’s seaborne oil passes, had seen a tentative revival in tanker traffic in recent days, the highest throughput since the United States and Israel launched military operations against Iran in late February. That recovery, fragile as it was, proved short-lived.
Beginning Thursday, a fresh wave of attacks on vessels transiting the strait shattered the calm. Among the ships targeted was a Qatar-linked oil tanker, an incident serious enough to trigger retaliatory strikes between Washington and Tehran, the most dangerous escalation since the two sides had inked their interim peace arrangement. The agreement, always viewed skeptically by energy market veterans, suddenly looked more like a ceasefire in name than in practice.
Diplomatic circuits crackled over the weekend. By Sunday, a senior U.S. official confirmed that Iran and the United States had agreed to pause the latest round of hostilities and resume negotiations over their broader standoff concerning the strait.
The announcement provided just enough of a floor to cap further oil price gains, but few analysts were prepared to call it a turning point.
The mood among energy traders on Monday was a complicated cocktail of cautious relief and unresolved anxiety. Analysts at ING captured the tension bluntly in a note circulated to clients.
“There’s still plenty of risk facing the oil market,” the bank’s analysts wrote, noting that market participants seemed to be fixating on what a sustained recovery in oil flows might eventually mean for global supply balances, rather than grappling with the very real possibility that such a recovery could prove far slower and more painful than current pricing implies. “This complacency is odd and clearly leaves significant upside risk if the supply recovery proves slow,” they warned.
It is a warning the market may be wise to heed. Analysts at ANZ Research were equally cautious, writing that the market was likely to be forced to reassess its assumption of a quick supply rebound from the Persian Gulf region. The bank pointed to a trio of interlocking problems that stand between current disruption and any meaningful normalization.
“Physical flows are constrained by tanker backlogs, damaged infrastructure, and production shut-ins,” ANZ analysts wrote. “It could take the remainder of the year before supply is near pre-conflict levels.”
In plain terms, the pipelines, ports, and tanker fleets that once moved Persian Gulf crude to refineries across Asia, Europe, and beyond are not simply waiting to be switched back on. The damage to physical, logistical, and financial resources runs deep.
Against that backdrop, one piece of genuine good news emerged from Saudi Arabia on Friday. State oil giant Saudi Aramco announced it had resumed crude oil loadings at its Ras Tanura export terminal, located on the western approaches to the Strait of Hormuz.
The terminal, one of the largest oil shipping facilities in the world, had been shuttered for nearly four months as producers scrambled to navigate the conflict and protect critical infrastructure.
Its reopening was seen as a significant milestone and a sign that major Gulf producers were pressing ahead with efforts to ramp up output and exports, partly to lock in commercial advantage ahead of any formal deal.
But Sunday brought unwelcome news from the same facility. A helicopter belonging to Aramco crashed at Ras Tanura, killing all 14 nationals aboard. The cause of the crash was not immediately known, and Saudi authorities said an investigation had been launched.
Crucially, loading operations at the terminal were not halted in the wake of the accident, a decision that underscored the enormous commercial and geopolitical pressure to keep oil moving, even amid tragedy.
The broader picture that emerges from Monday’s market movements is one of a global oil supply system that has absorbed a serious shock and has not yet found its footing.
Prices remain well below the highs seen when the conflict first erupted, in large part because traders have repeatedly bet so far, prematurely, that a lasting resolution was at hand.
Each rally has faded. Each diplomatic breakthrough has been followed by fresh violence. And each uptick in tanker traffic through the Strait of Hormuz has been met, sooner or later, by renewed interference.
Whether the latest U.S.-Iran agreement to pause hostilities holds any longer than its predecessors remains the central question hanging over energy markets and over the hundreds of millions of consumers worldwide whose daily lives are shaped, invisibly but powerfully, by the price of oil.
For now, the market is waiting. Watching the Strait. And quietly, if not quite yet visibly, worrying.
WHAT YOU SHOULD KNOW
Global oil markets remain caught between fragile diplomacy and persistent instability. Despite a temporary ceasefire between the U.S. and Iran, renewed attacks on tankers in the Strait of Hormuz have made it clear that the interim peace deal is hanging by a thread.
While prices have nudged upward, analysts warn that markets may be dangerously underestimating how long a full supply recovery will take, potentially stretching to the end of the year.
