Brent Climbs Above $105 on U.S.-Iran Escalation Fears

Escalating Tensions and Threats to Maritime Trade Routes

Geopolitical friction intensified dramatically following weekend U.S. strikes on Larak Island near the Strait of Hormuz, which triggered retaliatory Iranian drone and missile strikes against sites utilized by American forces in Jordan and the United Arab Emirates. In response to these developments, an adviser to Iran’s Supreme Leader Mojtaba Khamenei warned that Tehran might expand the Middle East war to the Indian Ocean if the U.S. or Israel attacks again, according to an AFP report citing Iran’s news agency Fars.

The conflict has directly imperiled commercial shipping through vital regional chokepoints. Anadolu Agency reported that the UK Maritime Trade Operations stated a tanker was struck by three unknown projectiles while exiting the Strait of Hormuz off Oman. These attacks have heightened risks for operators using the crucial transit route, even as U.S. President Donald Trump maintained a different outlook on the passage’s security.

President Donald Trump said Monday that the Strait of Hormuz is in “extremely good shape,” claiming US naval assistance has helped an average of 30 ships pass through each night.

President Trump also signaled a firm military response to the recent regional escalations, telling Fox News, We’re going to hit them hard. There will be a response. Such rhetoric underscores the fragility of the transport corridors.

Market Impacts, Price Volatility, and Supply Pressures

The compounding effect of military strikes, threats to expand combat zones, and tanker attacks has placed severe upward pressure on global energy markets. While early European trading initially saw modest ticks as U.S.-Iran talks showed little sign of progress—with Brent reaching $98.28 a barrel and WTI at $92.26—prices soon broke past the $105 threshold for Brent and $93.80 for U.S. WTI.

Analysts point out that physical market vulnerabilities extend beyond crude oil itself. Refined products remain critically constrained, particularly diesel supplies worldwide. Discussing the broader market dynamics, Soojin Kim, analyst at MUFG, noted that Continued Hormuz flows and a Saudi pipeline restart could ease physical supply pressures, but persistent tanker attacks and limited diplomatic progress should keep volatility and the geopolitical risk premium elevated. Furthermore, analysts suggest that implementing a full or partial U.S. diesel export ban would offer only short-term relief before ultimately inflicting deeper damage on the market.