Key Highlights
- Brent crude climbed 0.9% to reach $89.28 per barrel on Monday following a weekly gain exceeding 5%
- Iranian strikes on oil tankers have virtually halted shipping operations through the Strait of Hormuz
- Vessel traffic through the critical waterway dropped to just five ships on Saturday, compared to over 130 daily before hostilities began
- Tehran and Muscat are engaged in negotiations regarding strait management, though Washington remains excluded from these discussions
- Major energy forecasters including OPEC and the IEA revised down their 2026 demand projections last week
Crude oil markets extended their upward momentum on Monday, building on recent gains driven by heightened anxiety over Middle Eastern geopolitical tensions and severe disruptions affecting a critical global shipping corridor.
Brent crude contracts advanced 0.9% to settle at $89.28 per barrel during early session activity. Meanwhile, U.S. West Texas Intermediate crude edged up 0.2% to reach $82.60 per barrel.
The international benchmark posted gains exceeding 5% during the previous week. The primary catalyst has been intensifying hostilities between Washington and Tehran, which have triggered significant interruptions to petroleum and natural gas maritime transport.
Critical Waterway Faces Near-Complete Vessel Shutdown
The Strait of Hormuz, which previously accommodated more than 130 vessel passages each day prior to the current crisis, has experienced a dramatic collapse in maritime activity. Iranian military actions targeting tankers attempting to navigate the strait have effectively deterred commercial shipping.
Maritime tracking information from Kpler, as reported by Reuters, indicated only five ships successfully transited the waterway on Saturday. By Sunday, that figure dropped to absolute zero.
Prior to the combined American and Israeli military operations against Iran that commenced in late February, this strategic passage represented one of the planet’s busiest bottlenecks for international petroleum and liquefied natural gas transportation.
Washington has additionally established a naval blockade surrounding Iranian harbors and has indicated its intention to maintain this posture without a defined endpoint.
Iran’s top diplomat stated during the weekend that Tehran has not initiated direct diplomatic engagement with Washington. American officials countered by threatening additional economic sanctions designed to compel Iran toward the negotiating table.
Market strategists at ING noted that assaults on commercial vessels are heightening anxieties regarding supply chain interruptions and complicating prospects for a diplomatic resolution between Washington and Tehran.
Diesel Markets Experience Most Severe Impact
While benchmark crude oil prices maintained elevated levels, refined petroleum products have faced intensified pressure from the ongoing crisis. ANZ market analysts identified diesel as experiencing the most constrained conditions across the entire oil complex.
Processing facility disruptions throughout the Persian Gulf have impaired diesel manufacturing capacity and export volumes, even as worldwide consumption of this fuel type remains robust.
The predicament is being compounded by the continuing conflict in Ukraine. Kyiv has maintained its campaign of targeting Russian petroleum infrastructure, introducing additional stress to already constrained global supplies.
ANZ strategists cautioned that diesel availability could deteriorate further in upcoming months absent significant improvement in current conditions.
Notwithstanding these supply concerns, both OPEC and the International Energy Agency revised their 2026 worldwide oil consumption projections downward during the previous week. These diminished demand expectations failed to exert meaningful downward pressure on market prices.
Iran and Oman are purportedly advancing toward a framework agreement concerning Strait of Hormuz administration. Nevertheless, the United States remains absent from these deliberations and continues to insist upon unrestricted commercial navigation through the strategic channel.
MUFG market analyst Soojin Kim observed that geopolitical instability and threats to essential maritime corridors are maintaining a substantial risk premium incorporated into crude valuations.
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