Oil Prices Rise as US, Iran Strikes Raise Supply Risks
Oil prices gained on Monday as escalating tensions between the US and Iran fueled supply concerns despite a ceasefire agreement between Washington and Tehran, while the prolonged Russia-Ukraine conflict kept geopolitical risk premiums elevated.
International benchmark Brent crude traded at $73.22 per barrel, up around 0.8% from the previous close of $72.60. US benchmark West Texas Intermediate (WTI) rose about 1% to $69.96 per barrel, compared with $69.23 in the previous session.
American forces carried out additional strikes against multiple targets in Iran after Tehran’s latest attack on a commercial ship near the Strait of Hormuz, the US military’s Central Command (CENTCOM) confirmed Saturday.
It said the strikes came after Iranian forces launched a one-way attack drone that hit the M/T Kiku at 4.30 a.m. ET (0830 GMT) while the Panama-flagged tanker was transiting near the Strait of Hormuz with more than 2 million barrels of crude oil.
CENTCOM said Iran had been given an opportunity to uphold a ceasefire agreement following US strikes a day earlier in response to an Iranian attack on the M/V Ever Lovely, but “elected not to.”
Earlier, US-based news outlet Axios reported, citing a US official, that US military was conducting strikes against Iranian targets near the Strait of Hormuz in retaliation for the attack on the commercial tanker.
Rep. Ro Khanna said Saturday that new US strikes on Iran violate the War Powers Resolution, warning that President Donald Trump could face court action if he does not halt the war.
“Trump must stop this war now — or we will take him to court to compel him to do so,” Khanna, the representative from the state of California, wrote on US social media company X.
On the other hand, Axios reported, citing a senior US official, that the US and Iran have agreed to halt mutual attacks and plan to meet in Qatar on June 30 to resolve disputes over the Strait of Hormuz, limiting further upward price movements.
The Russia-Ukraine war also remained a key factor for oil markets as attacks on energy infrastructure continued to fuel concerns over potential supply disruptions.
Russian President Vladimir Putin on Sunday said Russia has begun using its fuel reserves amid intensified Ukrainian attacks on the country’s energy sector.
Putin said a ban on the export of diesel fuel is under consideration, noting that a temporary ban on the export of gasoline and jet fuel has already been imposed “in the interests of domestic consumers.”
Due to recent Ukrainian drone attacks on Russian oil refineries, several facilities suspended operations for maintenance, prompting Moscow to periodically impose restrictions aimed at stabilizing the domestic fuel market.
Earlier this month, Ukraine’s General Staff claimed its forces had struck 16 major Russian oil refineries and fuel terminals, taking more than 30% of refining capacity offline.
However, comments from Putin suggesting that negotiations remain underway and that both sides could halt long-range strikes helped ease some geopolitical concerns, limiting further gains in oil prices.
Meanwhile, expectations that the Federal Reserve (Fed) could raise interest rates continued to weigh on oil prices by raising concerns over slower economic growth and weaker fuel demand.
In addition to economic data and geopolitical developments, comments from Fed officials remain in focus.
Minneapolis Fed President Neel Kashkari said he had projected one interest rate cut by the end of the year in March, but revised that outlook to one rate hike in June. Kashkari added that his expectations could change depending on incoming economic data
