US-Iran Tensions Drive Oil Prices Higher Amid Prolonged Supply Disruptions

Oil prices continued to climb on Monday as tensions between the US and Iran escalated over vessel strikes in the Strait of Hormuz. The move heightened concerns about prolonged supply disruptions from the Middle East.

Brent crude futures rose by 52 cents, or 0.54%, to $96.80 a barrel by 2354 GMT, while U.S. West Texas Intermediate crude was at $92.14 a barrel, up 66 cents, or 0.72%. The recent attacks have caused a significant reduction in oil flows through the Hormuz strait, where a fifth of the world's oil supply is used to transit.

The US forces struck three Iranian oil tankers on Saturday, including one off the coast of Kharg Island, near Iran's key oil export hub. The navy of Iran's Islamic Revolutionary Guard Corps responded by targeting three oil tankers that were traveling through unauthorized routes in the Strait of Hormuz as well as three additional US vessels in other areas.

The attacks represent a 'major escalation' in the maritime conflict, according to maritime intelligence firm Marisks. Commercial tankers are now being deliberately used as instruments of reciprocal economic pressure, substantially weakening the previous distinction between military confrontation and commercial shipping.