Oil jumped over 2.5% past $90 as Hormuz transit halts and US-Iran rhetoric escalates

Global crude benchmarks surged more than 2.5% on Monday, with Brent breaching the $90-a-barrel threshold as a near-total halt in Strait of Hormuz vessel transits and hardening diplomatic rhetoric between Washington and Tehran intensified global supply deficit concerns.

International Brent crude futures settled up $2.35, or 2.65%, at $90.87 a barrel. US West Texas Intermediate (WTI) crude gained $2.10, or 2.55%, to finish at $84.50 a barrel.

Upward momentum was driven by an acute bottleneck in the Strait of Hormuz, where tanker tracking data showed maritime traffic collapsed over the weekend to five vessels on Saturday and zero on Sunday, compared to 31 transits the previous weekend.

Bullish sentiment was compounded by a breakdown in diplomatic negotiations, as Washington ruled out extending the memorandum of understanding with Iran alongside renewed military threats, whilst Tehran warned of retaliatory escalation across regional transit corridors if interim terms remain unfulfilled.

Physical market tightness was further underpinned by US Department of Energy data revealing the Strategic Petroleum Reserve (SPR) fell by 5.3 million barrels to 293.4 million barrels last week—its lowest level since December 1982.

Stronger upside momentum was moderately checked as regional producers offered supply workarounds, with ADNOC tendering 14 million barrels of spot crude to Asian refiners at firm premiums, whilst Saudi Aramco made crude allocations available outside the Strait of Hormuz.

Written by: Aiman Haikal