Tensions in the Persian Gulf boiled over into oil market chaos as Brent crude breached $104 per barrel Monday, fueled by U.S. airstrikes on Iran’s Kharg Island. The benchmark oil surged 1.59% to $104.77 around 10:25 AM, while WTI gained 1.07% to $97.87, reflecting investor panic over supply risks.
Kharg Island, Iran’s oil export lifeline responsible for 90% of its shipments, became ground zero for the latest escalation. Iran’s IRGC responded by targeting American bases in Israel and Arab states, ratcheting up fears of a broader conflict. President Trump vowed retaliation if Tehran disrupts the Strait of Hormuz, a conduit for one-fifth of the world’s seaborne oil trade and key LPG flows.
In a bid for global cooperation, Trump pressed nations to secure the strait. The U.S. has specifically asked oil-hungry giants China and Japan to send warships, bolstering protections for vulnerable tankers. Domestically, the U.S. Fifth Fleet stands ready to escort commercial vessels, countering potential Iranian threats.
The IEA highlighted this as the most severe oil supply shock ever recorded, with Hormuz shipping virtually frozen. UAE’s Fujairah port, a crucial bypass, restarted loadings post-drone strike, but the incident exposed vulnerabilities. Brent’s recent 11% weekly rally to $119.50 evokes memories of post-Ukraine invasion peaks, now hovering above $103.
As militaries mobilize and markets watch anxiously, the standoff risks pushing energy costs higher, with ripple effects on inflation, transportation, and consumer wallets worldwide. Energy traders brace for what could become a prolonged crisis.