Brent oil tops $90 as US, Iran expand strikes in the Middle East

SINGAPORE: Brent oil prices rose 2% to more than $90 per barrel on Monday, ‌as escalating U.S.-Iran hostilities in the Middle East restricted oil shipments through the Strait of Hormuz.

Brent crude futures climbed $2.09, or 2.37%, to $90.19 by 0241 GMT, touching the highest since June 11, extending gains after rising 15.9% last week, its biggest weekly gain since ​April.

U.S. West Texas Intermediate crude was at $84.20 a barrel, up $1.71, or 2.07%, the loftiest since June 12. ​Front-month prices gained 15.5% last week, the largest weekly ascent since early March.

The Middle ⁠East conflict escalated over the weekend with the U.S. conducting a ninth straight night of attacks against Iran, while ​U.S. allies Kuwait and Bahrain reported more Iranian strikes.

"ICE Brent broke above $90 per barrel this morning with no let-up ​in the escalation in the Gulf," said ING analysts in a note on Monday.

"The U.S. and Iran continue to exchange strikes, which are proving to be deadly for both sides. If this escalation goes unchecked, we could return to an environment of ​wide-scale attacks across the Gulf."

The Islamic Revolutionary Guard Corps said on Monday that two oil tankers had exploded and ​been immobilised after attempting to transit what it described as an unsafe southern route through the Strait of Hormuz, alleging they ‌had been ⁠encouraged by the U.S. military to use the passage.

Reuters could not immediately verify the incident.

In recent days, both sides have taken aim at shipping traffic, with the U.S. saying it is enforcing a naval blockade on Iranian ports, and Iran saying it targets vessels violating its rules on navigating the Strait of Hormuz, which usually ​handles one-fifth of global oil ​trade.

A vessel was on fire ⁠northwest of Oman's Kumzar, the United Kingdom Maritime Trade Operations agency said early on Monday.

"The coming days and weeks will provide a clearer picture of the sustainable level ​of oil exports from the region under renewed dual blockades," Barclays analyst Amarpreet Singh ​said in ⁠a note.

"As things stand, we think oil markets are still too complacent about the potential fallout for inventories, which, unlike at the beginning of the war, are at the tightest of the past five years."

Four vessels made the transit through ⁠the Strait ​of Hormuz on Sunday, down from eight in the previous day, ​LSEG data showed. At least three oil product tankers and one Very Large Crude Carrier, have entered the strait since Friday to load ​oil, the data showed.