KARACHI: Global oil markets witnessed a volatile start to the week as crude prices surged more than 6 per cent on Monday, clawing back losses from a massive Friday sell-off. The rebound comes amid a collapse of the short-lived ceasefire between Washington and Tehran, leading to the re-closure of the strategic Strait of Hormuz.
Brent crude futures jumped $6.11, or 6.76%, to settle at $96.49 a barrel by 2327 GMT. Similarly, U.S. West Texas Intermediate (WTI) rose by $6.53, or 7.79%, to reach $90.38 a barrel.
The price hike effectively erased the 9 per cent plunge seen on Friday, which had been triggered by premature hopes of a sustained de-escalation.
Escalation in the Gulf
The renewed tensions follow a weekend of maritime hostilities. The U.S. military confirmed it had seized an Iranian cargo ship allegedly attempting to bypass its blockade. In a swift war of words, both nations accused the other of violating the ceasefire agreement by targeting vessels over the weekend.
https://archive.mmnews.tv/us-seizure-of-iranian-flagged-tanker-near-hormuz-sends-oil-prices-soaring/
In response to the escalation:
Strait of Hormuz: Iran has reimposed its blockade on the vital waterway, which historically handled one-fifth of global oil supply.
Diplomatic Standoff: Tehran announced it would boycott the second round of peace talks, despite threats of renewed airstrikes from U.S. President Donald Trump.
Blockade Status: While the U.S. maintains a strict blockade of Iranian ports, the status of the Strait remains precarious, shifting between open and closed as the two-month-old conflict drags on.
Friday’s market crash was fueled by reports that Iran had opened passage for all commercial vessels and claims from President Trump that Tehran had agreed to a permanent opening. Data from Kpler indicated a brief window of activity on Saturday, with over 20 ships—carrying oil, LPG, and fertilizers—crossing the waterway, the highest traffic since March 1.
However, analysts warn that the reprieve was an illusion.
“Oil markets continue to gyrate in response to oscillating social media posts by the U.S. and Iran, rather than the realities on the ground,” said Saul Kavonic, head of research at MST Marquee.
Kavonic noted that the announcement of the Strait opening proved premature, adding that ship owners would now be “twice shy” about entering the region without concrete security guarantees.
Long-term Impact
The persistent instability in the Middle East is casting a long shadow over energy costs. Analysts suggest the supply chain disruptions are becoming structural, with projections indicating that U.S. gasoline prices could remain above $3 a gallon until 2027.
As the “war of blockades” intensifies, the global economy remains braced for further energy shocks, with little sign of a diplomatic breakthrough on the horizon.
