Nicolai Haugsted
Escalating US-Iran conflict drives oil prices higher
Fresh military action in the Middle East has renewed fears that the fragile calm between the United States and Iran could be slipping away.
Just weeks after both sides agreed to pursue further negotiations, new strikes, retaliatory attacks and growing uncertainty over one of the world’s most important shipping routes have once again raised concerns about regional stability and global energy supplies.
New strikes exchanged
The U.S. Central Command announced that American forces carried out another wave of precision strikes against dozens of targets across multiple locations in Iran on Sunday.
Iran responded on Monday, with the Revolutionary Guards claiming responsibility for attacks targeting U.S. military bases in Kuwait and Bahrain.
The latest exchange has intensified doubts about the interim agreement signed last month, which was intended to reopen the Strait of Hormuz and pave the way for another 60 days of negotiations aimed at ending the conflict.
Strait of Hormuz remains in focus
President Donald Trump insisted on Sunday that commercial shipping is still moving through the Strait of Hormuz.
“The Strait of Hormuz is open to commercial traffic,” Trump said.
His comments came after Iran had earlier declared that the strategic waterway had been closed following an incident involving a vessel that reportedly traveled along an unauthorized route before being struck.
Before the conflict erupted at the end of February, roughly one-fifth of the world’s oil and liquefied natural gas passed through the strait.
According to ship-tracking company Kpler, only six vessels transited the passage on Sunday—the lowest daily figure recorded in five weeks.
Markets remain cautious
Due to the renewed military escalation, oil prices have risen 4 percent, according to Reuters.
Analysts at ANZ suggested the latest developments have undermined hopes that recent clashes would quickly fade.
“Hopes of a relatively quick resolution to the recent skirmishes may be in doubt after tension escalated over the weekend,” the bank said in a research note.
IG market analyst Tony Sycamore said investors appear to believe the latest fighting represents a deterioration within an already fragile truce rather than the complete collapse of the ceasefire.
“How accurate that view is remains to be seen,” he wrote.
Although global oil production increased by 4.1 million barrels per day in June following last month’s agreement, the International Energy Agency says output remains well below levels seen before the war began, highlighting the continuing impact of the conflict on global energy markets.
