Oil prices jump as reported Hormuz strike and regional tensions roil supply outlook

Oil market reacts to conflicting reports and geopolitical risks

Brent oil futures for July climbed 3.3% to $111.79 a barrel by 06:47 ET (10:47 GMT), while West Texas Intermediate crude futures rose 2.9% to $104.87 a barrel. Brent crude briefly touched $114.29 following the Iranian media reports before retracing part of the advance after Axios journalist Barak Ravid reported that a senior U.S. official had denied the missile strike claim.

The reported incident added to existing tensions in the Strait of Hormuz, a key chokepoint supplying about 20% of the world’s oil production. Traffic through the waterway has remained disrupted since Iran effectively blocked the channel in late February. Iran has stated it will keep Hormuz closed until the U.S. lifts its naval blockade, while Washington has said Iran must first reopen the channel and agree to a nuclear deal, leaving both sides at an impasse.

On Sunday, Trump said the U.S. would begin an effort from Monday to guide ships stranded in the Strait of Hormuz, with the stated aim of assisting neutral countries in the U.S.-Israel war on Iran. He said his representatives were “having very positive discussions” with Iran but gave few concrete details. Separately, U.S. Central Command said support would include destroyers, more than 100 land and sea aircraft, and 15,000 service members, while noting it was not immediately clear whether the plan would involve direct military action.

OPEC+ output move and Ukraine-Russia tensions add to supply concerns

Earlier in the day, oil prices were pressured after the Organization of the Petroleum Exporting Countries and allies (OPEC+) voted to increase production quotas despite mounting supply disruption risks linked to the U.S.-Israel war on Iran. OPEC+ said on Sunday it will raise oil production by 188,000 barrels per day in June. The announcement followed the United Arab Emirates’ departure from the producer group on May 1.

Supply concerns extended beyond the Middle East after Ukraine launched a wave of drone attacks on Russian targets on Sunday. Ukraine struck the Baltic Sea port of Primorsk and targeted several vessels and energy infrastructure in the area. Ukraine has repeatedly focused on Russian oil infrastructure in an effort to limit Moscow’s revenue and constrain its war operations.

FAQ

Why did oil prices initially jump on Monday?
Oil prices rose after Iranian media reported that two missiles had struck a U.S. warship in the Strait of Hormuz, heightening fears of further escalation and potential supply disruptions.

How did the U.S. respond to the reported missile strike?
According to Axios journalist Barak Ravid, a senior U.S. official denied the claim that a U.S. warship had been hit by missiles.

What production decision did OPEC+ make?
OPEC+ said it will increase oil production by 188,000 barrels per day in June, following the United Arab Emirates’ exit from the group on May 1.

How is Ukraine affecting global oil supply concerns?
Ukraine has conducted drone attacks on Russian energy infrastructure, including a strike on the Baltic Sea port of Primorsk and other vessels and facilities, raising additional concerns over potential supply disruptions.