Oil Rises as US-Iran Maritime Escalation Raises Risk of Prolonged Supply Disruption

Oil prices extended their gains on Monday as renewed attacks by the United States and Iran on vessels in and around the Strait of Hormuz raised fears that disruption to Middle Eastern energy flows could persist.

Brent crude rose to around $97 a barrel, while West Texas Intermediate moved above $92. Brent had already gained 7.8% last week, with WTI rising almost 10%, as military exchanges resumed and traffic through the Strait of Hormuz declined.

The latest escalation is significant because the conflict is increasingly affecting commercial shipping rather than remaining confined to military targets. US forces struck three Iranian oil tankers on September 5, while Iran's Islamic Revolutionary Guard Corps said it had targeted tankers using unauthorised routes through the Strait as well as US vessels elsewhere.

Hormuz becomes the central pressure point

The Strait of Hormuz has long been one of the most important chokepoints in the global energy system. Before the conflict intensified, roughly a fifth of the world's oil supply moved through the waterway.

That flow has now fallen sharply. According to shipping data cited by Reuters, an average of only 10 commodity ships passed through the Strait each day over the previous 10 days, the lowest level recorded since May. The decline suggests that the market is responding not only to actual supply losses but also to the growing risk that tankers may be unwilling or unable to operate normally in the area.

Iran has also signalled plans to establish a new restricted zone outside the Strait and introduce new shipping routes. Such measures could further complicate the movement of commercial vessels even if the physical infrastructure for exporting oil remains operational.

The market is pricing in a longer disruption

The immediate concern for oil markets is no longer simply whether supplies will be interrupted, but how long abnormal conditions will last.

ANZ analysts expect Middle Eastern exports to remain constrained through the end of 2026, with a gradual reopening potentially beginning late in the fourth quarter. A return to pre-conflict levels of throughput may not come until late in the first quarter or early in the second quarter of 2027.

That would turn a temporary geopolitical shock into a more persistent energy-market problem. Refiners, shipping companies and energy importers would have to operate with higher transport costs, elevated insurance risks and greater uncertainty over delivery schedules.

The pressure is already extending beyond crude. A separate Reuters analysis found that global fuel-oil supplies are heading towards a substantial deficit as refineries disrupted by geopolitical conflict prioritise diesel and gasoline. Singapore, one of the world's main marine-fuel hubs, is particularly exposed to the resulting squeeze.

OPEC+ has limited room to offset the shock

The latest escalation also puts greater attention on OPEC+ and its ability to compensate for disrupted Middle Eastern flows.

The producer group kept its October output policy unchanged at its latest meeting, while further quota decisions remain unresolved. That leaves the market without an immediate signal of a major production increase capable of neutralising the geopolitical premium.

At the same time, the current disruption is different from a conventional production cut. Even if producers retain the ability to pump additional barrels, those supplies still have to reach international markets. When the principal problem is the security of maritime routes, additional production alone cannot fully resolve the shortage.

This is why the Strait of Hormuz has become as important to oil prices as the oil fields themselves.

A wider risk for global energy security

The longer the maritime confrontation continues, the more difficult it becomes to separate energy security from military security.

Goldman Sachs has warned that oil could rise towards $120 a barrel if attacks on vessels intensify, while a stabilisation of regional exports could eventually push prices back towards $80. The unusually wide range illustrates how much of the current price is being driven by uncertainty rather than a straightforward change in global demand.

For Europe and other major energy importers, the episode reinforces a structural vulnerability: access to energy depends not only on diversified suppliers but also on the security of the routes connecting them to consumers.

The immediate market reaction may therefore be only the first stage of a broader adjustment. If commercial shipping remains restricted around Hormuz, higher crude prices could gradually feed into transport, industrial production and consumer energy costs, while governments face renewed pressure to strengthen strategic reserves and alternative supply routes.