Oil Prices Climb Amid Escalating Tensions with Iran and Strait of Hormuz Disruptions

Oil prices rose over 0.7% in early Asian trade on Monday, August 17, as tensions between the US and Iran continued to escalate. Brent crude futures increased by $0.60 to $89 a barrel, while U.S. West Texas Intermediate crude futures slipped $0.40 to $83 a barrel.

The price hike comes after tanker traffic through the Strait of Hormuz slowed over the weekend, with no peace deal in sight between the US and Iran to end the conflict in the Middle East.

Iranian Foreign Minister Abbas Araqchi stated that Iran had not decided to resume talks with the US. In contrast, U.S. President Donald Trump called on Americans to accept slightly higher gasoline prices while the conflict continues.

The disruption in shipping through the Strait of Hormuz is crucial for the outlook of crude prices. JPMorgan estimates that every additional month of disruption could add $7 to $8 a barrel to Brent prices, with average monthly prices reaching around $114 a barrel if the disruption lasts three months.