Oil prices were rising Monday as President Donald Trump said the US was reinstating a blockade of Iranian shipping in the Strait of Hormuz amid growing tensions in the Middle East.
West Texas Intermediate crude was up 7.4% at $76.72 a barrel in afternoon trade, while Brent gained 7.5% to $81.75.
The US and Iran continued to exchange airstrikes over the weekend, with Tehran targeting American military facilities across several Middle Eastern countries, news outlets reported. Hostilities between the two countries resumed recently, weeks after they signed a memorandum of understanding to end their war.
Iran's Islamic Revolutionary Guard Corps reportedly said it closed the crucial Strait of Hormuz until further notice, though the US military disputed the claim. The narrow waterway is the world's most important chokepoint for crude flows.
The strait is open and will remain so "with or without Iran," Trump said Monday.
"We are reinstating the Iranian blockade, so named because it is only stopping Iran's ships or customers from entering or leaving," Trump said in a social media post. "All other countries will have fair and open use of the strait."
"The USA will be, from this point forward, known as 'the guardian of the Hormuz strait,' but as such, and as a matter of fairness, will be reimbursed, at the rate of 20% on all cargo shipped," Trump wrote.
The growing US-Iran conflict threatens to derail the recovery of global oil inventories and further diminishes the chances of a diplomatic breakthrough, Saxo Bank said Monday.
"Even so, the relatively modest premium between front-month and deferred futures suggests the physical crude market remains orderly for now," the firm said in a note. "The main focus continues to be refined products, where already tight market conditions -- recently exacerbated by Russia's diesel export ban -- are adding to inflationary pressures."
On Monday, the Organization of the Petroleum Exporting Countries reduced its global oil demand growth outlook for this year while upgrading its projection for 2027. Last week, the International Energy Agency projected a smaller decline in global oil demand in 2026 amid signs of a rebound in consumption as crude flows improve.
