SINGAPORE: Global oil prices surged sharply on Monday, climbing above $100 per barrel, as markets reacted to the United States Navy preparations to enforce a blockade on Iranian maritime trade routes amid escalating geopolitical tensions.
Benchmark Brent crude rose by $6.96, or 7.3%, to reach $102.16 per barrel in early trading, after slipping slightly in the previous session. Meanwhile, West Texas Intermediate (WTI) jumped $8.12, or 8.4%, to $104.69 per barrel, reversing earlier losses.
The sharp price rally follows the announcement by Donald Trump that the US would begin blockading Iranian-linked shipping through the strategically critical Strait of Hormuz, after diplomatic efforts with Tehran failed to yield a ceasefire agreement.
Energy analysts warn that the move could significantly disrupt global supply, potentially blocking up to 2 million barrels per day of Iranian-linked oil flows. “The market is now largely back to pre-ceasefire conditions, with heightened geopolitical risk priced in,” said Saul Kavonic, head of energy research at MST Marquee.
Market sentiment has been further shaken by fears that the blockade could escalate into broader conflict, reintroducing a geopolitical risk premium that had briefly eased during ceasefire negotiations. Analysts note that even the threat of enforcement has been enough to drive prices into triple-digit territory once again.
According to the United States Central Command, the blockade will target vessels entering or leaving Iranian ports, though ships transiting the Strait of Hormuz to non-Iranian destinations will not be restricted.
The Islamic Revolutionary Guard Corps has issued a stern warning, stating that any foreign military presence near the strait would be considered a violation of the ceasefire and met with a decisive response.
Despite rising tensions, shipping data indicated that three fully loaded supertankers successfully passed through the Strait over the weekend—the first such movement since the ceasefire was announced. However, many oil tankers are now avoiding the route in anticipation of potential disruptions.
Adding to supply-side dynamics, Saudi Arabia confirmed it has restored full capacity on its East-West pipeline, capable of transporting up to 7 million barrels per day, providing an alternative route to bypass the Strait of Hormuz.
With geopolitical risks intensifying and supply uncertainties mounting, analysts expect oil prices to remain volatile in the coming weeks, with sustained upward pressure likely if tensions escalate further.
By Reuters
