Oil Climbs as US-Iran Tanker Strikes Raise Supply Fears

Oil prices extended their gains on Monday, climbing more than a dollar a barrel, as fresh tit-for-tat strikes between the United States and Iran on vessels heightened concerns over prolonged supply disruptions from the Middle East.

Brent crude futures rose 1.25% to $97.48 a barrel, while US West Texas Intermediate (WTI) crude gained a similar margin to trade at $92.62. Last week, Brent had already surged 7.8% and WTI nearly 10% following the resumption of attacks that reduced traffic through the Strait of Hormuz, a chokepoint that once handled a fifth of the world's oil supply.

Over the weekend, US Central Command said its forces struck three Iranian oil tankers, including one off the coast of Kharg Island, near Iran's key export hub. In response, Iran's Islamic Revolutionary Guard Corps navy said it targeted three tankers travelling through unauthorised routes in the Strait of Hormuz, as well as three additional US vessels in other areas.

Maritime intelligence firm Marisks described the weekend attacks as a "major escalation in the maritime conflict," noting that commercial tankers are now being deliberately used as instruments of reciprocal economic pressure, blurring the line between military confrontation and commercial shipping.

Data from analytics firm Kpler showed an average of ten commodity ships transited the Strait of Hormuz daily over the past ten days, the lowest since May. "If tanker traffic begins to slow materially, the market could price in a much larger supply shock," said Priyanka Sachdeva, head of market insights at Phillip Nova.

Adding to the tension, Iran's Supreme National Security Council secretary, Mohsen Rezaei, said a restricted zone would be announced outside the Strait of Hormuz in the coming days, according to state media.

Meanwhile, OPEC+ kept its oil output policy unchanged for October at a meeting on Sunday, as the producer group said it needs to agree on new quotas before deciding its next output steps.

Analysts at ANZ said a prolonged standoff, punctuated by calibrated military action, appears the most likely scenario, delaying the path to full recovery of Middle East supply. They expect exports to remain constrained through the rest of 2026, with a gradual reopening late in the fourth quarter of that year, and a return to pre-war throughput not expected until late first quarter or early second quarter of 2027.