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US Oil Update: Crude Benchmarks Extend Gain as Supply Concerns Persist

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Oil prices gained more than 1% on Monday as persistent supply disruption risks in the Middle East outweighed progress on alternative shipping routes through the Strait of Hormuz.

Front-month West Texas Intermediate crude futures rose by 1.7% to $79.48 per barrel, while Brent futures advanced by 1.8% to $85.09/bbl.

"Oil prices remain supported by ongoing uncertainty around the Strait of Hormuz," ING analysts noted.

The upward price action reflects persistent anxiety over physical supply flows in the Middle East, even as Iranian Foreign Minister Seyed Abbas Araghchi posted on Sunday via Telegram that negotiations with Oman to establish a temporary shipping route through the Strait of Hormuz are in their "final stages."

Araghchi noted that traditional shipping lanes in the chokepoint would be replaced with new routes following expert consultations. However, he maintained a firm stance that Tehran and Washington are not currently engaged in bilateral talks and will not initiate them while the US remains in breach of an interim deal signed in June.

On the geopolitical front, Houthi forces launched a drone strike targeting Saudi Arabia's Jazan refinery, occurring just days after the kingdom signed a landmark trilateral defense pact with Turkey and Pakistan.

Meanwhile, UAE's Adnoc said on Friday that three of its vessels were attacked while transiting Hormuz this week, bringing the total number of its vessels targeted since the conflict began to 15.

The UAE Ministry of Foreign Affairs condemned the Iranian missile attack that targeted a petroleum carrier affiliated with the Abu Dhabi National Oil Company as it transited the Strait of Hormuz.

Last week global oil benchmarks posted their second straight weekly loss in a volatile week marked by shifting US-Iran tensions, stalled Strait of Hormuz navigation talks, and an OPEC+ decision to lift production quotas for September.

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