Oil prices jump over 2% after US-Iran direct conflict re-ignites after a month of pause

Oil prices surged over 2% per barrel on Monday following renewed Middle Eastern conflict. The US attacked an Iranian island in the Strait of Hormuz, while Iran retaliated by targeting US bases in Jordan. Brent crude soared $1.86, or 2.11%, to $89.96 per barrel; WTI crude climbed $1.60, or 1.92%, to $85.00 per barrel. Global benchmarks dropped more than 4% last week, their first weekly decline in three weeks.

The conflict had intensified, with US forces striking Iranian launchers on Larak Island on Sunday, marking the first US strike on Iran since July. Iran responded by launching missiles at US bases in Jordan, with eight intercepted by the country's armed forces. The ongoing conflict, now in its sixth month, remains stalled in talks, prompting mediators to work on reopening the Strait of Hormuz, which once facilitated a fifth of global oil flows.

Shipping data revealed a decline in vessels traversing the strait, with only five observed over the weekend. The UK's Maritime Trade Operations reported a tanker being hit by a projectile while entering the strait on Saturday. The latest US strike followed Trump's hint of refraining from new strikes due to Gulf allies' insistence, after a prior military action on July 29.

Iran's Revolutionary Guard condemned the attack, calling it a "fatal mistake" during the economic war. The US administration, meanwhile, weighs lower munitions stockpiles, raising concerns over potential military readiness weaknesses in other regions. Additionally, Trump announced the use of oil from a recent deal with Venezuela to replenish the Strategic Petroleum Reserve, which had hit its lowest level in 44 years.