Brent Climbs Above $90 as US-Iran Conflict Complicates Hormuz Reopening

Oil prices rose more than 2% in early Monday trading as renewed military activity between the US and Iran increased uncertainty over efforts to restore normal shipping through the Strait of Hormuz. Continued disruption through the strategic waterway is tightening global oil supplies and reducing inventories.

The rise followed Friday’s losses, when October Brent crude settled 39 cents lower at $89.31/bbl, while October WTI declined 13 cents to $83.40/bbl. At the time of writing, November Brent was trading at $90.02/bbl, up $1.92 or 2.18%, while October WTI stood at $84.91/bbl, gaining $1.51 or 1.81%.

Fresh US-Iran Strikes Delay Hormuz Reopening Hopes

The latest increase came after US forces struck two Iranian launchers on Larak Island in the Strait of Hormuz on Sunday. This marked the first known US strikes against Iran since late July. Iran then attacked two US air bases in Jordan, according to Iranian media citing the Revolutionary Guards.

The renewed military exchanges have created additional uncertainty around negotiations intended to end the conflict and reopen the Strait of Hormuz. Before the war began at the end of February, around one-fifth of global oil supplies passed through the waterway.

Shipping through the Strait remains severely restricted. Visible commodity vessel traffic fell to only five vessels per day over the weekend. The UK Maritime Trade Operations also reported that a tanker traveling inbound through Hormuz was struck by a projectile on Saturday.

DBS head of energy research Suvro Sarkar said the latest escalation was likely to push back expectations for the reopening of Hormuz. However, the bank still considers a contained confrontation more likely than a prolonged escalation. DBS expects oil prices to remain broadly within the $85-95/bbl range until there is greater clarity surrounding the Strait.

IEA Projects 4.3 Million Bpd Supply Decline in 2026

The International Energy Agency (IEA) has warned that extended disruptions through Hormuz are placing increasing pressure on global oil supplies and inventories. In its latest Oil Market Report, the agency expects global oil supply to decline by 4.3 million barrels per day in 2026, with higher production from the Americas only partly compensating for losses from the Middle East and Russia.

The disruption has also affected refined products. Tight supplies and falling inventories have tightened diesel, jet fuel and gasoline markets, pushing refining margins to record levels. At the same time, higher fuel costs and interruptions to international supply chains are weighing on consumption.

The IEA now forecasts global oil demand to fall by 1.6 million bpd this year, a major shift from its pre-war projection of 850,000 bpd growth. While global inventories continue to provide some supply protection, the agency cautioned that stocks are being drawn down rapidly as the disruption continues.

If normal shipping through Hormuz resumes, the global oil market could return to a supply surplus toward the end of the year. However, the IEA emphasized that significant uncertainty remains around the outlook.

US Plans to Rebuild Strategic Reserves With Venezuelan Oil

US President Donald Trump said oil obtained under Washington’s recently announced agreement with Venezuela would be used to replenish the Strategic Petroleum Reserve (SPR).

The US reserve contained around 290 million barrels as of August 21, close to a 44-year low, following major withdrawals in response to supply disruptions and high fuel prices in recent years.

However, the Venezuelan agreement is not expected to provide a major immediate increase in US supply. Restoring Venezuela’s oil industry will require significant investment and infrastructure improvements before production can rise substantially, leaving the timing and volume of potential SPR deliveries uncertain.

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