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EMEA Oil Update: Prices Rebound Amid US-Iran Clashes, Choked Supply

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Crude prices rallied on Monday as an abrupt escalation of military hostilities between the US and Iran shattered brief hopes that diplomacy would prevail over attacks in the Middle East.

Front-month Murban crude futures gained 3.1% to $92.87 per barrel, while Brent futures were up 2.2% to $93.17/bbl.

The price rebound was triggered by a rapid escalation of military tensions in the Middle East over the weekend, analysts noted.

The US Central Command confirmed in a post on X that it conducted self-defense strikes against Iranian radar and drone control sites on Goruk and Qeshm Island, following the shooting down of a US MQ-1 drone over international waters.

In response, Iran's Islamic Revolutionary Guard Corps reportedly said on Monday that it targeted an airbase linked to a US attack on a Sirik Island telecoms tower.

These clashes have cast a shadow over diplomatic efforts though officially the mutually-agreed US-Iran ceasefire remains in place.

Although US President Donald Trump stated on Friday that he would soon decide on a preliminary deal to extend the ceasefire to buy negotiators time to address Iran's nuclear program, analysts remain skeptical.

ANZ analysts said that doubts persist over Iran's willingness to accept the new US proposal, and Iran's Foreign Ministry confirmed that no agreement has been reached.

Meanwhile, global oil supplies remain severely constrained.

The Strait of Hormuz remains closed, cutting off more than 15 million barrels per day of world oil supply. While a growing number of vessels have attempted the risky transit in recent weeks, several attacks have underscored the persistent dangers to shipowners and crews.

With shipping lanes choked, global inventories are being aggressively drawn down, a trend mirrored by recent US crude inventory data showing a drop in crude stockpiles last week.

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