Oil prices surged by 3% following an escalation of strikes between the US and Iran in the Middle East

Oil prices surged on Monday as Iran intensified strikes on Gulf states in response to attacks by the United States, posing a threat to energy shipments through the Strait of Hormuz.

Brent crude futures increased by $2.34, or 3.08%, reaching $78.35 by 2311 GMT, while U.S. West Texas Intermediate crude rose by $2.21, or 3.09%, to $73.62 a barrel.

During the weekend, Tehran intensified its strikes on Qatar and the United Arab Emirates, while the U.S. conducted additional strikes on Iran. This marks the latest development in an ongoing cycle of attacks and counter-attacks concerning shipping through the strait.

On Sunday, U.S. President Donald Trump stated that the Strait of Hormuz remains open to commercial traffic, despite Iran’s earlier announcement that it had closed the strait following an incident where a vessel was hit while traveling on an unapproved route.

On Sunday, six vessels transited the strait, according to shiptracking data from Kpler, marking the lowest number in five weeks.

The increasing attacks raise additional concerns about the viability of the interim U.S.-Iranian agreement established last month, which sought to reopen the strait and conclude the war following another 60 days of negotiations.

According to the International Energy Agency’s monthly report released on Friday, global oil supply increased by 4.1 million barrels per day in June, yet it still fell short by 9.4 million bpd compared to pre-war levels. ANZ analysts noted that “hopes of a relatively quick resolution to the recent skirmishes may be in doubt after tension escalated over the weekend.

IG market analyst Tony Sycamore noted that the modest increase in oil prices indicated that the market perceived the recent tensions as an intensification within a delicate truce, rather than a total breakdown of the ceasefire.

The accuracy of that perspective is yet to be determined,” he stated in a note.