Oil prices rose sharply in Asian trade on Monday after U.S. forces struck two Iranian launchers on Larak Island near the Strait of Hormuz. The renewed military confrontation revived concerns that further escalation could disrupt shipping and energy flows through one of the world’s most strategically important oil transit routes.
As of 00:53 ET (04:53 GMT), Brent Oil Futures expiring in November rose 2.5% to $90.28 per barrel, while West Texas Intermediate (WTI) crude futures advanced 2.2% to $85.24 per barrel. Later trading pushed prices even higher as markets continued to assess the risk of further U.S.-Iran exchanges.
Key market figures
| Indicator | Latest move |
|---|---|
| Brent crude futures | +2.5% to $90.28/barrel |
| WTI crude futures | +2.2% to $85.24/barrel |
| Strait of Hormuz crude flows cited by ING | ~5 million b/d |
| Location of U.S. strike | Larak Island, near Strait of Hormuz |
U.S. strike renews fears around the Strait of Hormuz
The gains followed a U.S. military operation on Sunday against two Iranian launchers on Larak Island, marking the first known American strikes on Iran since late July. A U.S. official reportedly said forces from Iran’s Islamic Revolutionary Guard Corps had been observed preparing rockets carrying sea mines for deployment into the strategic waterway.
Iran subsequently launched missiles toward U.S. forces stationed in Jordan in apparent retaliation for the Larak Island strikes. According to reports citing U.S. sources, most incoming missiles were intercepted and there had been no significant impact at the time of the initial reports. Iranian media also reported attacks on U.S. air bases in Jordan as the confrontation expanded.
The renewed exchange is particularly important for oil markets because Larak Island sits close to the Strait of Hormuz. Any military activity involving mines, missile systems or commercial shipping in the area can quickly translate into a higher geopolitical risk premium for crude.
Shipping confidence becomes the key market question
“The key is whether this ignites further rounds of strikes from both sides, and whether it leaves shippers hesitant to navigate the Strait of Hormuz,” ING analysts said in a note.
According to the source article, producers in the region had become more comfortable moving crude through the chokepoint in recent weeks, with an average of around 5 million barrels per day transiting the strait. A renewed escalation could reverse that improvement if tanker operators, insurers or energy companies begin reassessing the security risk.
This is why the immediate market focus extends beyond the physical damage caused by the U.S. strikes. Even without a major disruption to production, greater uncertainty over maritime traffic can raise freight, insurance and logistical costs while encouraging traders to price in the possibility of tighter supply.
Hormuz remains central to the oil risk premium
Oil markets have remained highly sensitive to developments in the Middle East throughout the year. Brent has repeatedly moved in response to changing expectations surrounding military escalation, ceasefire negotiations and the prospect of a more sustained recovery in shipping through the Strait of Hormuz.
Earlier this month, doubts over progress toward a U.S.-Iran peace agreement helped push Brent to its highest closing level since late July. Iran had maintained that the strait would remain restricted unless Washington changed its approach, keeping geopolitical risk firmly embedded in energy prices.
The latest attacks reinforce that uncertainty. Reuters reported that tanker traffic through the strait has remained under pressure, while renewed military action has again raised concerns about whether recent improvements in shipping conditions can be sustained.
Why the Strait matters for global energy markets
The Strait of Hormuz is a narrow maritime corridor connecting the Persian Gulf with the Gulf of Oman and the wider global shipping network. Its importance means that even a temporary deterioration in security can have consequences well beyond Iran itself.
For oil traders, the main transmission channels are straightforward:
- Shipping disruption: fewer vessels may be willing or able to transit the waterway.
- Higher insurance costs: greater military risk can increase the cost of moving crude through the region.
- Supply uncertainty: markets may price in the possibility that Gulf exports become temporarily constrained.
- Geopolitical premium: crude prices can rise even before actual supply is lost if traders see a growing probability of escalation.
The latest rally therefore reflects more than the immediate U.S. strike. It represents a renewed premium for uncertainty around one of the world’s most sensitive energy corridors.
Venezuela and the Strategic Petroleum Reserve enter the supply picture
Attention is also turning toward broader supply developments after U.S. President Donald Trump said Washington would begin replenishing the Strategic Petroleum Reserve using oil obtained under a new agreement with Venezuela.
The announcement could eventually provide another source of crude for the United States and help rebuild strategic inventories. However, the near-term market reaction remains dominated by developments in the Middle East, where renewed U.S.-Iran military action has once again raised concerns over the reliability of Gulf energy flows.
What investors should watch next
The most important factor is whether the Larak Island confrontation develops into another sustained round of strikes. Additional attacks on military infrastructure, shipping routes or energy facilities could keep upward pressure on Brent and WTI, particularly if tanker movements through Hormuz begin declining again.
Markets should also watch commercial shipping activity, insurance conditions and any signs that diplomatic negotiations are restarting. If the situation de-escalates quickly, part of the geopolitical premium could unwind, but continued military exchanges would increase the probability of renewed supply disruption.
For now, the return of Brent above $90 shows that crude traders are once again assigning significant weight to geopolitical risk in the Strait of Hormuz.
