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US Oil Update: Crude Settles Higher After US-Iran Clashes, Trump Vows Further Strikes

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Crude oil futures settled higher in after-hours trading on Monday after the US and Iran exchanged fire for the first time in a month, as President Trump warned of further military action against Tehran, reviving concerns about further disruptions to crude supplies in the Middle East.

Front-month West Texas Intermediate crude rose 3.5% to $86.31 per barrel, while Brent futures climbed 3% to $90.72/bbl.

On Monday, Trump reportedly said that the US is going to hit Iran "very hard," after Tehran launched attacks on American army bases in Jordan and the UAE in response to Washington's strike on Larak Island in the strait over the weekend.

The US Central Command fired on Iran's Islamic Revolutionary Guard Corps forces after they were seen preparing to deploy mines into Hormuz.

Centcom said that US forces took "limited, precise" action against minelaying forces of the IRGC that posed an "imminent threat" in the strategic waterway, without giving details.

On Sunday, Trump also said in a social media post on Sunday that Iran's energy hub of Kharg Island was being "blown to smithereens", but there was no evidence the island was under attack.

Saxo Bank strategists said that developments in the Middle East have once again dashed the prospects of bringing the conflict to an end. However, the analysts said that with an estimated 6-8 million barrels per day of crude flowing through the strait, the upside risk is, for now, being capped.

Fueling bullish sentiment, Iranian media also said that an unidentified supertanker attempting to pass through the southern route in Hormuz was hit by two mines early on Monday and claimed that the country's authorities seized a bulk carrier near the port of Bandar Abbas in the Persian Gulf.

However, Centcom refuted the reports, saying on Monday that no ships had hit mines in the strait.

ING strategists said the key is whether US-Iran clashes ignite further rounds of strikes from both sides and whether they leave shippers hesitant to navigate the Strait of Hormuz.

On the supply side, Trump said in a post on Truth Social that the oil from the deal with Venezuela will be used to replenish the US Strategic Petroleum Reserve.

Venezuelan interim President Delcy Rodriguez said that the energy agreement with the US would remain in force for 25 years and aim to increase crude output to 1.5 million barrels per day.

ING strategists said the key is whether US-Iran clashes ignite further rounds of strikes from both sides and whether they leave shippers hesitant to navigate the Strait of Hormuz.

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Oil Posts 1st Weekly Loss in 3 Weeks as Hormuz Shipping Corridor Hopes Offset Iran Sanctions

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Oil & Energy

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Oil & Energy

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