Oil prices extended gains on Monday, September 7, following an escalation of conflict between the US and Iran involving attacks on vessels in the Strait of Hormuz and other areas. Brent crude futures climbed $0.52, or 0.54%, to $96.80 a barrel, while US West Texas Intermediate crude rose $0.66, or 0.72%, to $92.14 a barrel. These gains built on significant increases from the previous week, with Brent rising 7.8% and WTI nearly 10% after the resumption of attacks reduced oil flows through the Strait of Hormuz, a crucial transit point for a fifth of the world's oil supply.
The recent escalation saw US forces striking three Iranian oil tankers on Saturday, including one near Iran's main oil export hub off Kharg Island. In retaliation, Iran's Islamic Revolutionary Guard Corps Navy announced it targeted three oil tankers traveling through unauthorized routes in the Strait of Hormuz, as well as three additional US vessels in other locations. Iran also claimed to have attacked a US naval drone and an American military unmanned surface vessel attempting to enter the strait, though the IRGC did not specify if the vessels were hit. Maritime intelligence firm Marisks described these Saturday attacks as a "major escalation in the maritime conflict," noting that commercial tankers are now deliberately being used as instruments of reciprocal economic pressure.
In response to the US strikes, Iran announced plans to establish a "restricted zone" outside the Strait of Hormuz in the coming days, with Mohsen Rezaei, the secretary of Iran's Supreme National Security Council, stating that any ship entering this zone with the intention of passing through the strait would be added to a sanctions list. Iran also indicated it would announce a new shipping route agreed upon with Oman for the waterway. This comes as OPEC+ decided to keep its oil output policy unchanged for October. Analysts from ANZ suggested that a prolonged standoff with calibrated military action is the most likely scenario, expecting oil exports to remain constrained through the rest of 2026, with a full return to pre-war throughput not anticipated until late first quarter or early second quarter of 2027.
The US and Iran had resumed attacks last week after a month of relative calm. US Energy Secretary Chris Wright stated that an average of nine million barrels of oil a day were passing through the Strait of Hormuz, with overall flows, including pipelines, being two-thirds or more of pre-conflict levels. However, he emphasized that these flows depend on US Navy escorts to protect against Iranian attacks. Iran's Economy Minister Ali Madanizadeh affirmed that Tehran plans to respond to US economic pressure with reforms, rejecting the notion that sanctions would force a change in course. Iran's Parliament Speaker Mohammad Baqer Qalibaf warned of a "faster, heavier and more painful response" to any future attacks on Iran's interests.
