Oil prices climbed in early Asian trade on Monday after the U.S. struck Iran for the first time in over a month, with Iran then retaliating against U.S. bases in Jordan.<\/p>\n
At the time of writing, WTI front-month futures<\/a> were trading at $85.46 per barrel, up 2.47%, while Brent front-month futures<\/a> had climbed 2.71% to $90.49 per barrel.<\/p>\n The latest escalation started on Sunday when U.S. forces struck two Iranian rocket launchers on Larak Island, which sits inside the Strait of Hormuz. According to a U.S. Central Command spokesperson, the attack came after the IRGC were observed \u201cpreparing to launch rockets with sea mines into the Strait of Hormuz.\u201d<\/p>\n CENTCOM later described<\/a> the action as a \u201climited, precise action against IRGC minelaying forces posing an imminent threat in the Strait of Hormuz.\u201d<\/p>\n It was only last week that President Trump claimed<\/a> that the U.S. had finished clearing mines from the Strait and warned that any ship or boat placing new mines would be \u201cimmediately and systematically destroyed\u201d.<\/p>\n Iran responded to the Larak strike by launching ballistic missiles and drones at U.S. military installations in Jordan.<\/p>\n The Jordanian Armed Forces said<\/a> on Monday morning that its air defenses had intercepted and destroyed eight missiles after they entered Jordanian airspace.<\/p>\n The IRGC then confirmed<\/a> that it had targeted technical and maintenance infrastructure and fighter aircraft positions at two U.S. bases in Jordan and warned that Iran would \u201cforcefully respond\u201d to every new U.S. strike.<\/p>\n That leaves the oil market in an all-too-familiar position of attempting to establish if this will become another contained round of escalation or if it is the beginning of another major disruption for Gulf oil exports.<\/p>\n Brent’s move back above $90 is significant, but prices remain well below the levels seen during earlier periods of the war. Both benchmarks fell more than 4% last week, and the early 2% gain has done little to offset broader market losses.\u00a0<\/p>\n Nevertheless, traffic through the Strait remains well below levels seen before the war, and there are growing fears that the recent selloff in oil may have outrun the reality<\/a> of today\u2019s physical market.<\/p>\n Over the weekend, visible commodity-vessel traffic through the Strait had dropped<\/a> to around five ships per day, and UK Maritime Trade Operations issued<\/a> a warning that another tanker transiting through the Strait had been struck by an unknown projectile.<\/p>\n