Oil jumps more than 2% after US attack on Iran's Larak island

Oil prices surged more than 2% on Monday (Aug 31) following the United States' attack on Iran's Larak island in the Strait of Hormuz, marking the sixth month of conflict in the Middle East. Brent crude futures increased by $2.51, or 2.85%, to $90.61 a barrel, while US West Texas Intermediate (WTI) crude rose by $2.13, or 2.55%, to $85.53.

The US carried out the initial known military strikes on Iran since late July, with Iran subsequently retaliating by targeting two US air bases in Jordan, according to Iranian media reports. Analyst Tony Sycamore stated that the situation could potentially escalate further, with WTI potentially breaching resistance levels between $85.80 and $85.90 per barrel, leading to further gains.

Although negotiations to resolve the conflict remain in deadlock, efforts are underway to reopen the Strait of Hormuz, which historically accounts for one-fifth of global oil flow. US Treasury Secretary Scott Bessent announced that the US would likely issue new secondary sanctions against Iran weekly, aiming to cut the country off entirely from the US dollar-based financial system.

Oil prices had previously declined by more than 4% last week, marking their first weekly drop in three months.