Oil prices climbed Monday after President Donald Trump posted on Truth Social that "every time Iran kills an American Soldier they will pay for that killing many times over." The statement came after three U.S. service members died in recent fighting with Iran, and for nine consecutive nights, American forces have conducted airstrikes on Iranian positions.
The international benchmark, Brent crude, gained 1.3% to end the day at $89.22 a barrel. U.S. West Texas Intermediate crude rose 0.9% to $83.23 a barrel. The latest gains extend a severe rally in energy markets, with crude rising about 20% in the last month.
The fighting is not just between the U.S. and Iran. Yemen's Houthi group, which is backed by Iran, imposed a maritime blockade on Saudi Arabia. Meanwhile, Iranian attacks on tankers in the Strait of Hormuz have already killed two seafarers this month.
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These threats to two major shipping routes - the Strait of Hormuz and the Red Sea - compound supply concerns.
Roughly one-fifth of global oil shipments traverse the Strait of Hormuz, a crucial waterway for energy transport. Any sustained disruption there could have severe repercussions for oil markets. These developments have heightened concerns about supply reliability even as demand remains steady.
Energy Aspects' founder and research director, Amrita Sen, told CNBC, "the market is still quite complacent despite the price increase we have seen." That is a striking warning when U.S. gasoline has already climbed to $4 a gallon - a level not seen since last June 17.
The complacency might not last. A substantial slowdown in shipping through the Strait of Hormuz would choke off a huge share of the world's oil supply. Combined with already depleted global inventories, that scenario could push oil prices above $100 a barrel.
The sustained military operations and shipping threats have already begun to affect global supply chains. American forces have carried out airstrikes on Iran for nine straight nights, while the Houthi blockade and Iranian attacks on tankers have raised insurance costs and rerouted vessels. These factors, combined with depleted inventories, could trigger a sharper price spike if the situation does not de-escalate soon.
On the other side, there is a small opening for diplomacy. Iran's foreign ministry spokesman, Esmail Baghaei, said, "The country could pursue negotiations with the U.S. based on Tehran's interests." But for now, the U.S. is not backing down. Trump's instruction was transmitted to Secretary of War Pete Hegseth and the top-ranking military official, Daniel Caine.
The current crisis echoes past episodes where the Strait of Hormuz became a flashpoint for oil markets. During the 1980s Tanker War and the 2019 attacks on Saudi facilities, brief disruptions caused sharp price spikes. Now, with global inventories already low and two key shipping lanes under threat, even a short-lived closure could have outsized effects, making the recent rally a potential precursor to far higher prices.
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