Crude Breaches $97 Mark As US, Iran Attack Each Other's Assets

Oil prices surged in early Asian trading on Monday as escalating tensions between the US and Iran raised fears of potential disruptions to the global energy supply. West Texas Intermediate (WTI) crude traded above $92 a barrel, while Brent crude approached $97 a barrel following a weekend of military escalation between the two nations.

The recent surge in oil prices followed a US military strike on three Iranian oil tankers, with US Central Command stating the action was taken after Iran’s Islamic Revolutionary Guard Corps attacked two US naval vessels with ballistic missiles. These targeted tankers included M/T Downy, M/T Stark 1, and M/T Kylo. US officials claimed the strikes were an economic response to attacks on American assets.

In retaliation, Iranian officials warned that future retaliations would be stronger, suggesting additional restrictions around the Strait of Hormuz could be imposed. The situation has generated uncertainty over the volume of crude oil passing through the Strait of Hormuz, a crucial global energy route. While US officials claim millions of barrels continue to flow through maritime routes and pipelines, Iran asserts the waterway is effectively closed.

Independent data on shipping suggests actual flows are somewhere between these claims, with tracking becoming more challenging as vessels deactivate identification systems. Despite uncertainties in supply levels, analysts believe the economic pressure campaign against Iran is impacting the country. However, it remains uncertain whether the pressure will push Tehran towards negotiations or result in further military escalation.

With geopolitical risks rising, oil markets are anticipated to remain volatile as traders closely monitor developments surrounding the Strait of Hormuz and the broader US-Iran conflict.