Brent crude prices climbed above $90 per barrel on Monday as worsening tensions between Iran and the United States heightened fears of further disruption to oil shipments through the Strait of Hormuz.
Brent futures settled at $90.87 per barrel, up $2.35, or 2.65 per cent, while US West Texas Intermediate (WTI) crude gained $2.10, or 2.55 per cent, to close at $84.50.
The latest rally came after a senior Iranian official warned that Tehran could adopt a “fully offensive” military posture if diplomatic efforts to resolve the conflict with Washington fail.
According to Reuters, the official said Iran was prepared to escalate tensions in the Strait of Hormuz and could launch military action to break a US naval blockade if negotiations produced no breakthrough.
The warning has intensified concerns among oil traders over the security of one of the world's most important energy routes, through which roughly one-fifth of global oil and liquefied natural gas supplies passed before the conflict began.
Shipping through the waterway has already slowed sharply. Kpler data cited by Reuters showed that only five commodity vessels crossed the strait on Saturday, while none were recorded on Sunday, compared with 31 during the previous weekend.
Peace efforts hit deadlock
The latest price surge followed the collapse of hopes for a quick resolution to the US-Iran conflict.
A June memorandum of understanding had provided a 60-day window for Washington and Tehran to negotiate a broader settlement involving Iran's nuclear programme, US sanctions and arrangements for the Strait of Hormuz.
The agreement, however, expired without a lasting settlement, with both sides maintaining sharply different positions over the management and security of the waterway.
US President Donald Trump has ruled out extending the interim arrangement and has demanded Iran's surrender.
Trump also threatened military action against Oman if the country interfered with US efforts, further complicating diplomatic attempts to ease tensions in the region.
Iran, meanwhile, has been holding separate discussions with Oman over arrangements for managing navigation through the Strait of Hormuz.
Iranian officials have said the talks are continuing, although progress has been slow because of the complexity of the issue and the involvement of several regional and international actors.
Supply disruption fears
The possibility of a prolonged disruption to shipping through Hormuz has become a major concern for the oil market.
The waterway connects the Persian Gulf with the Gulf of Oman and the Arabian Sea and is a crucial transit route for crude produced by major Gulf exporters.
Any sustained closure or further reduction in tanker traffic could tighten global supplies and push prices significantly higher.
The market is already responding to the heightened risk. Brent and WTI both gained more than 5 per cent last week following attacks on tankers operated by Abu Dhabi National Oil Company and an attack on a Saudi Aramco refinery.
At the same time, Saudi Arabia and the United Arab Emirates have been seeking to maintain supplies to Asian customers through alternative routes and arrangements outside the Strait of Hormuz.
US oil inventories are also under pressure, with crude stocks in the Strategic Petroleum Reserve falling to about 293.4 million barrels last week, their lowest level since December 1982.
Analysts say oil prices could remain volatile as traders weigh the possibility of a diplomatic breakthrough against the risk of a wider military escalation.
For now, the combination of stalled peace talks, reduced tanker traffic and threats of further military action has placed a renewed geopolitical premium on crude, pushing Brent back above the psychologically important $90-a-barrel level.
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