Oil extends gains after US and Iran strike ships

Oil prices continued to rise on Monday as the United States and Iran engaged in a cycle of strikes against each other's shipping vessels in the Strait of Hormuz and other regions, raising worries about a lasting reduction in Middle Eastern oil supplies. Brent crude futures increased by 52 cents, or 0.54 percent, to $96.80 per barrel as of 2354 GMT, while US West Texas Intermediate crude rose by 66 cents, or 0.72 percent, to $92.14 per barrel.

Brent prices surged 7.8 percent last week, and WTI advanced nearly 10 percent after the US and Iran resumed attacks, leading to a decline in oil flows through the Hormuz Strait, which historically accounted for one-fifth of the world's oil supply.

On Saturday, US forces targeted three Iranian oil tankers, including one near Kharg Island, near Iran's primary oil export hub. The Iranian Islamic Revolutionary Guard Corps Navy claimed on Saturday that it had attacked three oil tankers attempting unauthorized routes through the Strait of Hormuz and three additional US vessels in other areas. The strikes marked a significant escalation in the maritime conflict, according to maritime intelligence firm Marisks.

Commercial tankers are now being deliberately employed as tools of reciprocal economic pressure, blurring the line between military confrontation and commercial shipping, the firm added. The average of 10 commercial ships transited the Strait of Hormuz daily over the past ten days, the lowest level since May, data from analytics firm Kpler revealed on Monday.

Iran's Supreme National Security Council Secretary Mohsen Rezaei announced on Sunday that a restricted zone will be declared outside the Strait of Hormuz in the coming days, as per state media.

OPEC+ decided to keep its oil output policy unchanged for October during a meeting on Sunday, the producer group stated in a declaration, emphasizing that new quotas must be agreed upon before deciding its subsequent output steps. The analysts from ANZ forecast that a prolonged standoff, marked by measured military actions from the US and Iran, is the most probable scenario and is likely to postpone the full recovery of Middle Eastern supply, delaying the path to full recovery of Middle East supply.

They anticipate that exports will remain constrained throughout the remainder of 2026, with a return to pre-war throughput not expected until late in the first quarter or early in the second quarter of 2027.