Summary
- US in talks with other countries to protect Strait of Hormuz
- Brent, WTI have surged more than 40% this month
- US hit military targets on Iran’s Kharg Island oil export hub
- Oil reserves to begin flowing to market soon, IEA says
(Reuters) – Oil prices were mixed on Monday with benchmark Brent crude slightly higher and U.S. crude prices down amid attacks on Gulf oil production and U.S. President Donald Trump’s call for global efforts to secure the Strait of Hormuz. Brent crude futures were up 16 cents to $103.30 a barrel by 1137 GMT while U.S. West Texas Intermediate crude was down $1.50, or 1.5%, to $97.21.
Both contracts have surged more than 40% this month to their highest since 2022, after the U.S.-Israeli attacks on Iran prompted Tehran to halt shipping through the Strait of Hormuz, a critical waterway for a fifth of global oil and LNG supplies.
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Oil loading operations have resumed at the United Arab Emirates port of Fujairah, two sources told Reuters on Monday, after it was halted earlier following a drone attack that triggered a fire in the emirate’s petroleum industrial zone.
Fujairah, outside the Strait of Hormuz, is the outlet for about 1 million barrels per day of the UAE’s flagship Murban crude oil – a volume equal to about 1% of world demand.
The war in the Middle East is creating the biggest oil supply disruption in history, the International Energy Agency said on Thursday, as major oil producers such as Saudi Arabia, Iraq and the UAE cut production.
Investors seem to recognise that if just two weeks of disruption at the Strait of Hormuz have inflicted this level of damage on production, exports and refining, the consequences of a prolonged conflict would be severe, especially as inventories are steadily depleted, said PVM analyst Tamas Varga.
“U.S. strikes over the weekend on Kharg Island raised supply concerns, as most of Iran’s oil exports pass through it,” ING analysts said on Monday.
While the strikes appear to have targeted the military, rather than energy, infrastructure, they still pose supply risks since Iranian oil is about the only oil moving through the Strait of Hormuz for now, ING said.
Over the weekend, Trump threatened further strikes on Iran’s Kharg Island, which handles about 90% of its exports, after hitting military targets there, spurring further retaliation from Tehran.
On Sunday, Trump said he was demanding that other countries help to protect the key energy route, adding that Washington was in talks with several nations about policing the strait.
Britain is working with allies on a collective plan to reopen the Strait of Hormuz and restore freedom of navigation in the Middle East but it will not be easy, British Prime Minister Keir Starmer said on Monday.
The U.S. is also in contact with Iran, Trump said, but expressed doubt that Tehran was prepared for serious talks to end the conflict.
On Sunday, the International Energy Agency said more than 400 million barrels of oil reserves will begin flowing to the market soon, a record draw aimed at combating price spikes caused by the Middle East war.
Stocks from countries in Asia and Oceania will be released immediately, while those from Europe and the Americas would be available at the end of March, the agency said.
“As the conflict enters its third week, the lack of a clear denouement has left global markets increasingly worried about an uncontrollable escalatory spiral,” SEB’s Meyersson said.
Still, U.S. Energy Secretary Chris Wright said on Sunday he expected an end to the war within “the next few weeks,” with oil supplies rebounding and energy costs falling afterwards.
Reporting by Enes Tunagur in London, Florence Tan and Jeslyn Lerh; editing by Pooja Desai and Jason Neely
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