Oil rises as U.S.-Iran fighting revives supply fears

Highlights

Oil rises as US-Iran hostilities intensify again.
Hormuz traffic remains far below recent averages.
Shipping risks are supporting crude prices.

Brent crude futures rose 2.93% to $90.96 a barrel, while U.S. West Texas Intermediate futures gained 0.76% to $86.41. The advance followed direct U.S.-Iran attacks and renewed warnings of further military action, increasing the risk premium attached to crude prices, Reuters reported.

Hormuz tensions return to the oil market

The escalation followed a U.S. strike on Iranian rocket launchers on Larak Island, a strategically important position inside the Strait of Hormuz. Iran retaliated against U.S. military bases in Jordan, marking the first direct exchange of attacks between the two countries in more than a month.

Shipping conditions remain fragile. Only five visible commodity vessels passed through Hormuz on Monday, well below the 10-day average of roughly 14, according to Kpler data. None of those vessels were liquid tankers.

Maritime risks increased further after a tanker reported being hit by three projectiles while traveling through the southern shipping lane near Oman. No casualties or environmental damage was reported.

Diplomatic efforts led by Qatar and Oman have yet to produce a broader reopening of the waterway, leaving one of the world’s most important maritime energy corridors operating far below normal capacity.

Supply buffers are becoming thinner

The market is also paying closer attention to available supply cushions. Crude flows through Hormuz remain well below pre-conflict levels despite some continued movement through the waterway.

U.S. emergency inventories have fallen further. The Strategic Petroleum Reserve declined by about 3.1 million barrels last week to 286.6 million barrels, reducing the buffer available if another prolonged disruption hits global supply.

At the same time, seasonal demand is approaching in parts of Asia, increasing the importance of continued Gulf exports. That combination leaves the market more exposed if military activity begins to interfere further with physical crude shipments.

Traders refocus on supply disruption risk

Renewed fighting has forced oil traders to reassess how much geopolitical risk should be built into crude prices. With shipping through the Strait of Hormuz still constrained, the market has become more sensitive to military developments that could threaten vessels, export terminals, or other Gulf energy infrastructure.

For traders, the key issue is whether the latest confrontation begins to affect physical crude flows rather than remaining a contained military exchange. Continued disruption could encourage buyers to secure supplies earlier and make prices more vulnerable to sudden rallies, while signs of de-escalation could quickly remove part of the geopolitical premium.

The result is a more defensive oil market in which tanker movements, shipping security, and regional military developments are carrying greater weight in short-term trading decisions.

We have previously highlighted that Iran sets new conditions for full Hormuz reopening.

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