Brent Tops $90 as US-Iran Conflict Hits Gulf Oil Supplies
A collapsed US-Iran ceasefire and direct threats to Persian Gulf shipping have pushed Brent crude above $90, exposing a market with critically low inventory buffers.
Brent crude futures jumped $2.69, or 4%, to $90.79 a barrel on Monday, marking the highest level since June 11. US West Texas Intermediate (WTI) crude climbed $2.19, or 2.65%, to $84.68. The benchmarks extended a weekly rally that saw Brent gain 15.9% and WTI advance 15.5%, their largest such increases since April and early March respectively.
The immediate driver was Iran's declaration that its ceasefire with the United States had effectively broken down. The US conducted a ninth consecutive night of airstrikes targeting military capabilities used against commercial vessels. Simultaneously, Iran's navy stopped four vessels attempting to transit the Strait of Hormuz via an unsafe route, disabling two in accidents.
The conflict has moved beyond military sites to strike energy infrastructure directly. Kuwait Petroleum Corp. reported significant damage to one of its oil facilities following an Iranian strike on Saturday. Furthermore, Iranian attacks on the strategic waterway are actively threatening the "shuttle run" operations that Persian Gulf producers rely on to transport crude.
For market participants, the timing of this supply risk is particularly dangerous. According to JPMorgan Chase & Co., global oil inventories outside China are currently at record lows. This leaves the global market with very limited buffers to absorb any sustained supply shock.
Risks are also spreading across the broader Middle Eastern energy complex. Iran-backed Houthi militants in Yemen have disrupted Red Sea commercial shipping and threatened attacks on Saudi oil infrastructure following missile and drone launches toward the kingdom.
Kuwait and Bahrain were both targeted over the weekend, while Israel intercepted an Iranian drone near its Syrian border. Iranian media reported US strikes on Qeshm Island and the southern city of Shadegan. Additionally, the UK Maritime Trade Operations reported a vessel on fire northwest of Kumzar, Oman, though the cause remains unconfirmed.
With the US resuming efforts to restrict movement through the Strait of Hormuz and strikes hitting utilities, bridges, and ports, the prospects for a rapid de-escalation are fading. The exchange has shattered a previously fragile ceasefire, forcing markets to price in a prolonged period of elevated risk for critical oil transit chokepoints.
