Oil Jumps Over 2% After US Strikes Iran's Larak Island, Iran Retaliates Against US Bases in Jordan
Why It MattersEscalation around the Strait of Hormuz, through which roughly a fifth of global oil once flowed, raises fuel-cost and routing risk for aviation and shipping.
Oil prices surged more than 2% on Monday after US forces struck two missile launchers on Iran's Larak Island in the Strait of Hormuz, prompting Iran to retaliate with missile strikes on two US air bases in Jordan. Brent crude futures climbed $2.51, or 2.85%, to $90.61 a barrel as of 0241 GMT, while US West Texas Intermediate crude rose $2.13, or 2.55%, to $85.53 a barrel.
The strike on Larak Island on Sunday was the first known American strike on Iran since late July. US officials described it as limited and precise, targeting launcher sites that Iranian Revolutionary Guards were preparing to use to deploy sea mines into the Strait of Hormuz. Iran's state media, citing the Revolutionary Guards, reported that Iran responded by attacking the two US air bases in Jordan on Monday.
Negotiations to end the conflict, which began at the end of February, remain at an impasse. Mediators are working to reopen the Strait of Hormuz, through which about one-fifth of the world's oil flowed before the conflict began. The number of commodity vessels sailing through the strait over the weekend dropped to five per day, according to shipping data, as companies grew wary of attacks on ships. The United Kingdom Maritime Trade Operations reported that a tanker was struck by a projectile while sailing inbound through the strait on Saturday.
IG market analyst Tony Sycamore said the situation appeared to be entering another escalation phase, noting that if WTI broke above resistance at $85.80 to $85.90 it could open the way toward last week's high of $87.69 and ultimately July's high of $93.50. US Treasury Secretary Scott Bessent said the US planned to issue new secondary sanctions on Iran weekly to cut the country off entirely from the dollar-based financial system. US President Donald Trump said oil from a recently struck deal with Venezuela would be used to replenish the US Strategic Petroleum Reserve, which has fallen near its lowest level in 44 years. Brent and WTI were on track to post small declines for August overall, after falling more than 4% the previous week in their first weekly decline in three.
