Quick overview

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Oil prices increased as Iran increased its attacks on the Persian Gulf’s energy infrastructure. Brent moved closer to $105 per barrel, while West Texas Intermediate was at about $98 after falling 2.8 percent on Monday.

Iranian drones and missiles targeted an Iraqi oil field and a major Emirati port, and operations at the Shah field in the United Arab Emirates were halted.

The strikes have further damaged the prospects for the world’s energy supplies as the conflict moves into its third week.

Customers, particularly in Asia, are beginning to feel the effects of the near-total shutdown of shipping through the Strait of Hormuz. Oil prices dropped for the first time in four sessions on Monday as the US got ready to release the first tranche of emergency crude reserves.

Oil prices have increased by more than 40% since the war began. According to Rebecca Babin, a senior energy trader at CIBC, “there is a push and a pull constantly dragging the market higher and lower each day, based on the sheer amount of headlines.”

US President Donald Trump threatened to extend strikes on Kharg Island to target oil infrastructure after last weekend sparing energy assets on the major Iranian export hub.

Additionally, he claimed that Washington is “hammering” Tehran’s ability to endanger commercial shipping via the Strait of Hormuz and reaffirmed his calls for assistance from other countries to ensure passage.

Treasury Secretary Scott Bessent told CNBC that Washington is permitting Iran to keep using the waterway to ship crude. Kuwait and the United Arab Emirates both further decreased their oil production in the Middle East. The UAE and Saudi Arabia are competing to increase exports by using alternate routes that avoid Hormuz.

According to JPMorgan Chase and Co., transit through the strait is expected to become “increasingly conditional,” with Iran allowing passage for certain vessels based on their political affiliation. Natasha Kaneva and other analysts stated in a note.