Brent crude closed above $90 per barrel on Monday as renewed tensions between Iran and the United States raised concerns over a possible disruption to oil shipments through the Strait of Hormuz.
The benchmark Brent crude was quoted at $90.53 per barrel as of Monday evening, gaining $2.01, or 2.27%, according to Oilprice.com. US West Texas Intermediate (WTI) crude also rose to $84.25 per barrel, up $1.85, or 2.25%.
The price increase followed renewed tensions around the Strait of Hormuz after a senior Iranian official told Reuters that Tehran had shifted its policy from defensive to “fully offensive” following a deadlock in efforts to secure a permanent end to the conflict.
The official said Iran was prepared to take military action in the Strait of Hormuz if diplomatic efforts failed.
“Iranian entities must be prepared to escalate tensions in the Strait of Hormuz and wider region, as Iran will be ready to make decisions and take action on difficult decisions,” the official told Reuters.
He added that Tehran would launch a “timely and precise” military attack to break a United States naval blockade if diplomatic efforts failed.
The threat could further disrupt tanker movements through the strategic waterway at a time when efforts to restore oil traffic through the strait have stalled.
According to Reuters, progress towards peace talks and the resumption of oil tanker traffic through the Strait of Hormuz has effectively ground to a halt, with neither Iran nor the United States showing clear signs of moving towards an end to the conflict.
The latest escalation came as Iran and the United States were expected to reach a final agreement under a memorandum of understanding signed in June.
The June 17 memorandum provided a 60-day timeframe for Washington and Tehran to reach a broader agreement concerning Iran’s nuclear programme and US sanctions.
The interim agreement called for the “immediate and permanent termination of military operations on all fronts” but subsequently collapsed over disagreements regarding control of the Strait of Hormuz.
The waterway, shared by Iran and Oman, is one of the world’s most important energy corridors. About a fifth of global oil and liquefied natural gas supplies reportedly passed through the strait before the war.
Tehran maintains that the June agreement gave it the right to manage the waterway, while Washington rejected the interpretation.
The disagreement contributed to a resumption of hostilities, with Iran firing on vessels it said were attempting to navigate the strait using an unauthorised route.
US President Donald Trump subsequently declared the agreement over on July 7.
The Iranian official told Reuters that Tehran had given the United States only a short period to implement all provisions of the agreement before any further negotiations could take place.
“Within the short period of a few weeks set by Iran, all the agreement’s provisions must be implemented by the U.S. This is a precondition for further negotiations with the US,” the official said.
Mediators are expected to communicate Iran’s deadline to Washington and other countries in the region.
Iran is also holding separate discussions with Oman over the management of the Strait of Hormuz. Tehran said the two countries were close to an agreement despite slow progress.
The situation was further complicated by Trump’s warning to Oman during a phone interview with Fox News on Monday.
“If Oman gets in the way, we’ll bomb the shit out of them,” Trump said, according to Reuters.
Earlier, Trump had called on Iran to surrender, telling Fox News that Tehran “should put up the white flag of surrender”.
The renewed threats have heightened concerns about the security of shipping through the Strait of Hormuz and provided fresh upward pressure on crude prices.
The latest price movement follows a period when oil traded below $80 per barrel earlier in the month amid expectations that tensions around the waterway could ease.
Brent’s move to $90.53 therefore marks a return above the key $90 threshold, while WTI has risen to $84.25 per barrel as traders assess the potential impact of the escalating tensions on global oil supply.
