Oil prices climb after U.S. strikes Iranian launchers on Larak Island

Oil prices surged on Monday, marking the highest single-day gain since July, as the United States and Iran traded military strikes for the first time in over a month. This marked a stark escalation in tensions between the two nations. The global benchmark, Brent crude futures expiring in December, rose 5% to settle at $91.17 a barrel. Meanwhile, U.S. West Texas Intermediate crude futures expiring in October gained 3.5% to settle at $86.31 a barrel.

The situation in the Middle East remained tense, with the U.S. and Iran clashing over the Strait of Hormuz. Efforts to mediate a resolution between the two sides had largely been unsuccessful, with both nations exchanging harsh rhetoric. President Donald Trump's strategy appeared to have focused on economically pressing Iran. However, on Sunday, U.S. Central Command announced limited action against minelaying forces of Iran's Islamic Revolutionary Guard Corps that posed an imminent threat in the strait. This came just days after Trump claimed that the critical chokepoint had been cleared of all mines.

Iran's foreign ministry accused the U.S. of attacking Larak Island, and in response, Tehran carried out strikes against U.S. military bases in Jordan. Jordanian state media reported that the country had successfully intercepted and destroyed eight missiles. President Trump vowed to respond forcefully, warning of potential action against Iran's vital Kharg Island oil export terminal on his Truth Social service. He also posted a video warning of possible retaliation against Iran.

Elsewhere, the U.S. president announced an oil agreement with Venezuela, which he touted as the largest in history. The deal would grant the U.S. majority control of more than 65 billion barrels of proven oil reserves. Trump emphasized that this agreement would increase American oil reserves, enhance the country's oil supply, and significantly lower gasoline prices for Americans while supporting Venezuela's economic recovery and prosperity.

The U.S. Strategic Petroleum Reserve (SPR) saw a decrease in crude oil inventories to a record low of 286.6 million barrels, the lowest level since November 1982.