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US Oil Update: Crude Gains as US Launches Fresh Strikes, Red Sea Risks Stoke Supply Fears

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Crude futures settled higher in after-hours trading on Monday as the US military launched another round of strikes against Iran and renewed concerns over security in the Red Sea stoked fears of a severe regional supply crunch.

Front-month West Texas Intermediate crude futures rose 0.8% to $83.12 per barrel, while Brent futures climbed by 1% to $88.95/bbl.

The US Central Command posted on X on Monday that a fresh wave of strikes was launched on Iran.

"Today [Monday] at 4 p.m. ET, U.S. forces began a new round of strikes against Iran at the Commander in Chief's direction. The strikes are designed to further degrade Iranian military capabilities used to attack commercial shipping in the Strait of Hormuz," Centcom posted on X on Monday.

Earlier on Monday, Trump warned Iran that it would face a severe response for any killing of American military personnel, saying Tehran would "pay" for such actions multiple times over.

"Every time Iran kills an American Soldier they will pay for that killing many times over!" Trump said in a post on Truth Social.

He added that he had already passed on directives to Secretary of War Pete Hegseth, Chairman of the Joint Chiefs of Staff Daniel Caine, and other military leaders.

Trump's warning comes amid heightened US-Iran tensions, with regional security risks continuing to weigh on energy markets and shipping routes across the Middle East.

US Central Command had bombed Iran on Sunday for the ninth consecutive night in retaliation for repeated attacks on commercial vessels transiting the Hormuz. Iran, in response, continues to attack US bases in the likes of Kuwait, Jordan, Bahrain and Iraq.

On Saturday, Kuwait suffered one of its worst nights of Iranian retaliatory attacks since the Middle East conflict began, with strikes on an oil facility and a second power plant hit in as many days.

Yemen's Houthi movement, in support of Iran, also declared an immediate maritime embargo against Saudi Arabia on Monday, warning that any further escalation by Riyadh would be met with a broader response.

The Houthis have repeatedly threatened to close the Bab el-Mandeb Strait during the Middle East conflict. A wider conflict with the militants could jeopardize Saudi Arabia's oil exports through its East-West Pipeline, which allows crude to bypass the Strait.

The US-Iran hostilities have disrupted energy flows through the Strait, with the latest data from Kpler showing that traffic remained below normal levels, with only 30 verified transits recorded between July 17 and 19.

Meanwhile, Iran reportedly confirmed receiving proposals from "certain" mediators aimed at preventing further escalation of tensions with the US.

Esmail Baghaei, the spokesperson of Iran's foreign ministry, said during his weekly press briefing on Monday that mediators are actively striving to prevent further escalation and have conveyed proposals to Tehran, but he did not give further details.

On the fundamentals side, Gelber & Associates said that after reclaiming the $80/bbl level, crude is beginning to shift from a purely macro-driven trade toward one increasingly influenced by tightening export availability and improving physical market signals.

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