Oil prices on Monday jumped 3% – back above $90 a barrel – after the US and Iran exchanged strikes for the first time in a month.
By approximately 9:20 a.m. ET, Brent crude oil futures jumped 2.20% to $90.29 a barrel while West Texas Intermediate rose 2.25% to $85.65. National average gasoline prices remained stubbornly above $4 a gallon, according to AAA.
The US launched strikes on Iran’s Larak Island Sunday after Iran’s Islamic Revolutionary Guard Corps were allegedly setting up another wave of underwater mines in the Strait of Hormuz, a crucial maritime route for oil supplies, according to Axios.
“I can confirm that earlier today US forces struck two Iranian launchers on Larak Island. Islamic Revolutionary Guard Corps forces were observed preparing to launch rockets with sea mines into the Strait of Hormuz,” Navy Capt. Tim Hawkins, a spokesperson for US Central Command, said in a statement Sunday.
Iran retaliated with an attack aimed at US forces stationed in Jordan, but nearly all incoming missiles were intercepted with little to no impact on the ground, according to Fox News’ chief foreign correspondent Trey Yingst.
In a Truth Social post Sunday evening, President Trump threatened to ramp up hostilities, posting an AI-generated video of Kharg Island, Iran’s energy hub, “being blown to smithereens!!!”
The attack came just days after positive news for oil markets, as Goldman Sachs analysts said in a note last week that oil exports from the Persian Gulf had rebounded to two-thirds of pre-war levels.
Experts told The Post that the recovering supply could be enough to keep prices below the $90 level for the rest of the year – but only if there were no surprises.
Total exports of crude and oil products from the Gulf have jumped to 15 million to 16 million barrels a day as tanker traffic through the vital Strait of Hormuz has started to pick back up, analysts including Daan Struyven and Yulia Zhestkova Grigsby wrote in the note.
That’s about 7 million to 8 million barrels below pre-war levels, but a huge improvement from the 5 million to 6 million barrels a day that were being transmitted through the waterway in March, the note said.
It’s unclear how Sunday’s hostilities – the first publicly acknowledged US strikes on Iran since late July – will affect this progress, especially as oil reserves shrink and natural gas exports struggle to recover.
Tanker traffic through the Strait of Hormuz has been severely disrupted amid the Middle East conflict, which recently hit the six-month mark.
The Islamic Revolutionary Guard Corps confirmed the attack on Larak Island reportedly killed and wounded several people, but did not share further details.
The attack “will be answered by the sons of Iran and will result in the punishment of the aggressor,” the IRGC told state broadcasters.
US forces have previously targeted military sites on the island, which is near the heart of the Strait of Hormuz, over the regime’s ongoing attacks on commercial vessels and laying of mines throughout the strait.
Trump has repeatedly claimed the strait, a crucial waterway for 20% of global oil supplies, has been cleared of all mines.
In the meantime, the US Strategic Petroleum Reserve has fallen below the 300 million-barrel mark – hitting its lowest level in more than four decades.
The US Government Accountability Office has also warned that the emergency energy stockpile’s operational ability is at risk due to aging infrastructure that hasn’t been replaced.
While oil exports have improved, Goldman’s note warned that flows of liquefied natural gas and refined fuels are struggling.
“We continue to see greater price upside to European natural gas prices and deferred oil product prices in persistent disruption scenarios than for crude,” the analysts wrote.