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EMEA Oil Update: Oil Prices Rise as US Strikes on Iranian Tankers Heighten Supply Fears

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Oil prices gained more than 1% on Monday, driven by renewed strikes between the US and Iran including on tankers, and tightening global crude inventories.

Brent crude futures gained 1.2% to $97.38 per barrel, while Dubai First Line (Platts) energy futures were up 1.8% to $86.51/bbl. Brent gained more than 7% on a weekly basis last week.

"Crude extended last week's advance... after US attacks on Iranian tankers and Tehran's threat of a new restricted zone outside the Strait of Hormuz renewed concerns about prolonged supply disruptions," Saxo Bank analysts said.

US forces launched strikes on Saturday targeting three Iranian oil tankers including one off the coast of Kharg Island, Iran's primary export hub, while the Islamic Revolutionary Guard Corps' navy said it targeted multiple commercial and US vessels operating in the region.

US President Donald Trump said that American forces control the Strait of Hormuz and may soon strike what is known in English as Pickaxe Mountain in Iran, believed to be a uranium enrichment site.

Meanwhile, the OPEC+ sub-group led by Saudi Arabia and Russia formally agreed on Sunday to keep October production quotas unchanged in line with their roadmap, with Saudi Arabia maintaining its output at 10.5 million barrels per day.

Market analysts noted that international reserves are declining, providing a thinner buffer after nearly six months of conflict in the Middle East and resulting restrictions to energy supplies.

While weaker Chinese crude imports and coordinated inventory releases initially cushioned the market, OECD stockpiles have dropped sharply, the US Strategic Petroleum Reserve is nearing its effective operational limits, and product inventories remain near historically low levels, experts have said.

"Elevated inventories helped absorb the initial supply crisis, but the challenge is now to keep the market balanced as those buffers diminish," ANZ analysts said.

Experts warn that demand destruction will increasingly become the primary mechanism for rebalancing the market, keeping oil prices heavily supported in the near term.

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