Oil Prices Surge as US-Iran Tensions Escalate Over Strait of Hormuz Closure

Energy markets experienced a sharp rally Sunday evening as geopolitical instability returned to the Strait of Hormuz. US crude oil surged over 7% to approximately $90 per barrel, while international Brent crude rose 5% to reach $95 per barrel. The price action follows a sudden reversal by Iran, which closed the critical waterway after a brief period of openness. The Strait of Hormuz remains a vital global artery, facilitating the transit of more than 20% of the world's oil supply. Military tensions escalated rapidly over the weekend, with President Donald Trump reporting that Iranian forces fired upon commercial vessels, including ships from France and the United Kingdom. In response, the US military disabled the engine room of an Iranian vessel, which was subsequently boarded by US Marines. Shipping giant CMA CGM confirmed that one of its vessels was targeted with warning shots, though the crew remained unharmed. According to maritime tracking firm Kpler, no commercial ships were recorded crossing the strait on Sunday as the situation deteriorated. The shock reverberated across financial markets, with Dow futures dropping 500 points and the Russell 2000 sliding 1.4%. Beyond crude, wholesale gasoline prices climbed 4%, and heating oil futures—a key proxy for jet fuel—spiked 7%. Natural gas prices also rose 2%. Uncertainty persists regarding diplomatic resolutions. While reports emerged of potential negotiations in Islamabad, Iranian state media has denied these claims, leaving traders to brace for further volatility as the risk of a broader conflict increases.