Strait of Hormuz Oil Prices Jump on US-Iran Strikes

Key Facts

• Brent crude touched $79 a barrel Monday, its highest since June 22, before easing to $77.68 (+2.2%)
• The US carried out a fourth wave of strikes on Iran in a week; Iran retaliated against US-linked sites in the Gulf
• Ship traffic through the strait fell to a five-week low: just six vessels crossed on Sunday, per Kpler
• ADNOC cut its August Murban crude price to $80.01, down from $101.48 in July
• Goldman Sachs estimates pipeline bypass routes could shield 60%+ of pre-war Gulf exports from Hormuz disruptions by 2028

Strait of Hormuz oil prices jumped again Monday after the United States and Iran exchanged a fresh round of strikes, reviving fears that the fragile ceasefire between the two countries is falling apart. Brent crude touched $79 a barrel intraday, its highest level since June 22, before easing to trade up 2.2% at $77.68 by mid-morning GMT. West Texas Intermediate rose a similar amount to $73.00.

Why the Strait of Hormuz Is Back in the Spotlight

The latest flare-up began after Iran’s Revolutionary Guard struck a Cyprus-flagged container ship transiting the strait over the weekend. US Central Command answered with a fourth wave of strikes in a week, hitting dozens of additional targets early Monday and using one-way attack drones at sea for the first time. That pushed the total number of targets hit over the past week past 300, following a 140-target strike on Saturday alone.

Iran retaliated by targeting US-linked sites in Bahrain, Kuwait and Jordan on Sunday. Its Revolutionary Guards said Monday they had struck US military bases in Kuwait and Bahrain again. Iran’s self-declared Strait Authority says the waterway is closed to unauthorized traffic. However, President Trump and US Central Command have both said the strait remains open to commercial shipping, a direct contradiction that is keeping traders on edge.

Shipping Through the Strait of Hormuz Nears a Standstill

Regardless of who is right, the traffic data tells its own story. Ship-tracking firm Kpler recorded just six vessels crossing the strait on Sunday, a five-week low, down from roughly 30 to 40 tankers and bulk carriers a day the previous week. Before the war began in late February, the Strait of Hormuz carried about one-fifth of the world’s daily oil and LNG supply, which is why even a partial slowdown moves the market this much.

Markets React Across Asia and Beyond

Asian equities fell sharply on the renewed fighting, with Japan’s Nikkei 225 and South Korea’s Kospi both down and US stock futures softer ahead of the open. UN Secretary-General António Guterres called on both sides to show restraint, warning that a full return to conflict would carry serious consequences for regional stability and the broader global economy.

The risk premium is also spilling into borrowing costs. US mortgage rates ticked back up alongside the latest spike, unwinding some of the relief markets had priced in after June’s ceasefire. Higher oil tends to feed directly into inflation expectations, which is the main channel connecting a Gulf shipping dispute to a US homebuyer’s rate quote.

A Ceasefire Under Strain

The standoff traces back to disagreements over how the Strait of Hormuz was supposed to reopen under the interim memorandum of understanding the two countries signed on June 17, ending nearly four months of war. That deal gave both sides 60 days to negotiate a lasting settlement. Iran wants ships to use a northern route through its territorial waters, arguing it controls the strait, while the US insists on keeping the southern corridor open under military protection. That unresolved question is now the single biggest swing factor in oil markets.

Is There a Long-Term Fix for the Strait of Hormuz?

Even amid the latest spike, there are signs the market sees this as more containable than the war’s first months. Goldman Sachs estimates that expanding pipeline capacity across the Middle East could shield more than 60% of pre-war Gulf oil exports from future Hormuz disruptions by the end of 2028, with total bypass capacity rising above 14 million barrels per day by then.

Meanwhile, ADNOC set its August official selling price for Murban crude at $80.01 a barrel, down sharply from $101.48 in July, a sign that much of the earlier war premium had already come out of the market before this weekend’s escalation. Iranian oil held at sea is rising too, as Chinese independent refiners increasingly buy cheaper crude from Iraq, the UAE and Qatar instead.

Most analysts still expect this exchange to stay contained rather than spiral into a wider war, pointing to rising OPEC+ output and pipeline capacity being built specifically to reduce Hormuz dependency. Until both sides show real signs of stepping back, though, oil markets are likely to keep trading every headline out of the Gulf.

FAQs

Why are oil prices rising right now?
Oil prices rose after the US and Iran exchanged a fresh round of strikes over the Strait of Hormuz, reviving fears that the June ceasefire is collapsing and that shipping through the waterway will stay disrupted.

Is the Strait of Hormuz closed?
Iran says it’s closed to unauthorized traffic. The US says it’s open. Ship-tracking data shows real traffic has fallen to a five-week low regardless of the dispute.

How much oil moves through the Strait of Hormuz?
Before the war began in late February 2026, the strait carried roughly one-fifth of the world’s daily oil and LNG supply.

What was the US-Iran ceasefire that’s now at risk?
An interim memorandum of understanding signed June 17, 2026, meant to reopen the strait and lead to a full peace deal after 60 days of further talks.

How is Goldman Sachs viewing the long-term risk?
It estimates pipeline capacity expansion could shield over 60% of pre-war Gulf oil exports from future Hormuz disruptions by the end of 2028.

Why did ADNOC cut its oil price if tensions are rising?
The August Murban cut reflects how much of the earlier war premium had already faded before this weekend’s escalation, not a forecast of where prices go next.