SINGAPORE, July 20 — Brent oil prices rose two per cent to more than US$90 per barrel on Monday, as escalating United States (US)-Iran hostilities in the Middle East restricted oil shipments through the Strait of Hormuz.
Brent crude futures climbed US$2.09, or 2.37 per cent, to US$90.19 by 0241 GMT, touching the highest since June 11, extending gains after rising 15.9 per cent last week, its biggest weekly gain since April.
U.S. West Texas Intermediate crude was at US$84.20 a barrel, up US$1.71, or 2.07 per cent, the loftiest since June 12. Front-month prices gained 15.5 per cent last week, the largest weekly ascent since early March.
The Middle East conflict escalated over the weekend with the US conducting a ninth straight night of attacks against Iran, while US allies Kuwait and Bahrain reported more Iranian strikes.
"ICE Brent broke above US$90 per barrel this morning with no let-up in the escalation in the Gulf.
"The US and Iran continue to exchange strikes, which are proving to be deadly for both sides. If this escalation goes unchecked, we could return to an environment of wide-scale attacks across the Gulf," said ING analysts in a note on Monday.
Also on Monday, the Islamic Revolutionary Guard Corps said that two oil tankers had exploded and been immobilised after attempting to transit what it described as an unsafe southern route through the Strait of Hormuz, alleging they had been encouraged by the US military to use the passage.
Reuters could not immediately verify the incident.
In recent days, both sides have taken aim at shipping traffic, with the US saying it is enforcing a naval blockade on Iranian ports, and Iran saying it targets vessels violating its rules on navigating the Strait of Hormuz, which usually handles one-fifth of global oil trade.
Early on Monday, the United Kingdom Maritime Trade Operations agency said that a vessel was on fire northwest of Oman's Kumzar.
"The coming days and weeks will provide a clearer picture of the sustainable level of oil exports from the region under renewed dual blockades.
"As things stand, we think oil markets are still too complacent about the potential fallout for inventories, which, unlike at the beginning of the war, are at the tightest of the past five years," Barclays analyst Amarpreet Singh said in a note.
LSEG data revealed that four vessels made the transit through the Strait of Hormuz on Sunday, down from eight on the previous day. At least three oil product tankers and one Very Large Crude Carrier have entered the strait since Friday to load oil.
