Brent Crude Soars Past 107 As Strait Of Hormuz Risks Mount, Saudi Supply Shock Fuels Oil Rally

Global crude oil prices skyrocketed on Monday as tensions in the Middle East escalated, raising concerns about potential shipping route disruptions. Brent crude for November delivery surged 3.20 percent, reaching 107.82 dollars a barrel, while US benchmark West Texas Intermediate for October increased 3.20 percent to 103.20 dollars. Both benchmarks continued last week's rally, breaching the 100-dollar threshold.

Middle East security developments, particularly around the Strait of Hormuz and Red Sea, remained top-of-mind for oil markets. Reports of a Saudi Arabia pipeline shutdown following drone attacks heightened supply fears. A merchant vessel reportedly suffered damage in the Strait of Hormuz on Sunday, resulting in one death and three injuries. Iran has tightened control over the strait, mandating vessel permissions and exploring service fee imposition for non-compliant ships.

The United States has carried out airstrikes against parts of Iran's coastline, challenging Tehran's control over the strategic waterway. Oman has postponed Iran-Gulf talks on the future of the Strait of Hormuz. Brent crude has risen over 30 percent from its early-August lows, driven by the failure of a permanent US-Iran agreement to prevent attacks.

Fighting resumed in August, intensifying concerns over the security of oil supplies from the Gulf region. Saudi Arabia's crude output plunged to 6.2 million barrels per day in August, marking its lowest level in 2026 and a 23 percent decline from July. This decline coincides with Iran-backed Houthi forces in Yemen threatening Saudi Arabia's west coast oil shipments.