Brent crude topped $85 a barrel after Iran closed the Strait of Hormuz and the US launched a third round of airstrikes. Shipping rates doubled on the Gulf-to-Asia route.
Oil prices jumped more than 5% Monday, pushing Brent crude above $85 a barrel for the first time since November, after Iran's Islamic Revolutionary Guard Corps closed the Strait of Hormuz and the US launched a third round of airstrikes this week.
US Central Command said President Donald Trump ordered the fresh strikes, which targeted Iran's ability to attack commercial vessels, after Iranian forces attacked a Cyprus-flagged container ship. A civilian crew member is missing and the ship suffered significant damage, Central Command said.
Iran's state-run media reported explosions at multiple areas along the country's southern coasts, including the energy and petrochemical hubs of Bushehr and Asalouyeh. Blasts were also reported at the port cities of Bandar Abbas and Bandar-e Dayyer, as well as the Sirik area near the Strait of Hormuz.
"Iran made a poor choice," Pentagon chief Pete Hegseth said on social media. "Now they pay."
The IRGC announced the Hormuz closure, saying it won't allow any vessels to pass through until foreign interference ends, according to state-run IRIB News. The IRGC said it halted a cargo ship after firing a warning shot because it tried to transit the strait on Saturday despite being told not to, the outlet added.
The Strait of Hormuz handles about a fifth of the world's oil supply. A prolonged closure would dwarf the disruption from the 2019 Abqaiq attacks, traders said. Shipping rates for crude tankers on the Gulf-to-Asia route doubled in two days, shipbrokers said. Defense stocks rallied across the US and Europe, with Lockheed Martin and Rheinmetall among the biggest gainers.
The spike in oil adds to inflationary pressure at a time when the Federal Reserve is already grappling with sticky price data. Swap markets on Friday priced in a lower probability of a September rate cut. Gold rose above $2,400 an ounce as investors sought havens. The dollar strengthened against most currencies, with the yen and Swiss franc gaining.
Iranian Foreign Minister Abbas Araghchi traveled to Oman on Saturday for talks on the future of Hormuz. There was no sign of involvement by senior US envoys. Tehran demanded that Washington implement key commitments under a recent deal before more talks take place, rejecting Trump's contention that negotiations could continue without a ceasefire.
Trump on Friday threatened to shower Iran with "1000 Missiles" if it acted on a threat to kill the US leader, "in this case, ME!" The US had also demanded that Iran publicly declare all channels of the Hormuz open to shipping and pledge not to attack civilian vessels transiting the waterway. Tehran would face consequences if it fails to deliver the public assurance, senior Trump administration officials told reporters on condition of anonymity.
The Islamic Republic is holding a three-day memorial ceremony for the late Supreme Leader Ayatollah Ali Khamenei, killed in an attack as the US and Israel began their war on Iran at the end of February. His son and successor, Mojtaba Khamenei, on Saturday called for revenge for the killing of his father.
"It is our certain and undeniable duty that this revenge be carried out," he said in a post on X.
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