Oil prices surge over 2% after US strike on Iran’s Larak Island

Oil prices jumped more than 2% on Monday following a US strike on Iran’s Larak Island in the Strait of Hormuz and Tehran’s subsequent response, as the conflict between the two countries entered its sixth month.

Brent crude futures rose $2.21, or 2.51%, to $90.31 a barrel by 04:36 GMT, while US West Texas Intermediate crude climbed $1.83, or 2.19%, to $85.23 a barrel.

US forces on Sunday targeted two launch platforms on Larak Island, marking the first known American airstrikes on Iran since late July. Iranian media reported that the Islamic Revolutionary Guard Corps retaliated by attacking two US air bases in Jordan.

US President Donald Trump posted a brief message on social media suggesting Kharg Island had been “leveled,” though no evidence of an attack on the island has emerged and the post offered no further details.

Negotiations to end the conflict have stalled, while mediators work to reopen the Strait of Hormuz, which previously carried a fifth of global oil supplies before the war began at the end of February.

Tony Sycamore, a market analyst at IG, said the situation has entered a new phase of escalation with uncertain duration. Meanwhile, Suvro Sarkar, head of energy research at DBS, noted that the likelihood of limited confrontation is higher than sustained escalation, and each round of tension affects the timeline for reopening the strait.

Shipping data showed the number of visible commodity vessels passing through the strait dropped to five per day at the start of the week, as companies remain wary of attacks. The UK Maritime Trade Operations agency reported that an oil tanker was hit by a projectile while transiting the strait on Saturday.

US Treasury Secretary Scott Besant said the United States will likely impose new secondary sanctions on Iran on a weekly basis.

Both Brent and West Texas Intermediate are on track for slight declines in August, after falling more than 4% last week in their first weekly drop in three weeks.

Trump also indicated that oil from a recent deal with Venezuela will be used to replenish the US Strategic Petroleum Reserve, which has fallen to its lowest level in 44 years.