Brent crude and West Texas Intermediate futures surged sharply in Asian trade after Iran declared the Strait of Hormuz closed to commercial shipping.
Brent Oil Futures expiring in September rose 4.8% to $79.65 per barrel, while West Texas Intermediate crude futures climbed 5% to $74.98 per barrel.
The dramatic price moves followed Tehran’s announcement that it had closed the critical waterway after a commercial vessel was struck amid ongoing hostilities.
Iran expanded missile and drone attacks to Gulf states including Qatar and the United Arab Emirates in retaliation for U.S. military strikes on Iranian targets.
The Strait of Hormuz is the primary export corridor for crude oil from Saudi Arabia, Iraq, Kuwait, the United Arab Emirates, and other major Gulf producers.
Any sustained disruption to traffic through the strait could force refiners, particularly those in Asia, to scramble for alternative supplies at significantly higher cost.
Freight and insurance costs are also expected to climb sharply as shipping companies assess the risk of transiting one of the world’s most strategically vital energy routes.
President Donald Trump disputed Iran’s closure claim, saying commercial shipping through the waterway remained open and was operating under U.S. military protection.
Despite Trump’s assurances, shipping activity slowed sharply over the weekend, deepening concerns about prolonged supply disruptions hitting global crude markets.
The International Energy Agency said in its monthly report that fresh U.S.-Iran hostilities could derail an expected recovery in supply if disruptions through Hormuz persist.
The IEA said global oil supply rebounded by 4.1 million barrels per day in June as crude flows through the strait resumed, though production remained well below pre-conflict levels.
Analysts warn that if the closure holds beyond a short window, the ripple effects across global energy markets could be substantial and difficult to contain quickly.
