Oil Surges Above $90 as US-Iran Tensions Escalate

Oil prices jumped more than 2% on Monday, with Brent crude rising above $90 a barrel as renewed US-Iran hostilities intensified concerns over energy supplies.

The latest surge followed a US strike on Iranian rocket launchers on a small island in the Strait of Hormuz, marking Washington’s first attack on Iran in a month. Tehran subsequently retaliated by targeting US military positions in Jordan.

US President Donald Trump said Washington would respond to Iranian attacks on US targets in the Middle East.

The renewed fighting has raised fresh concerns over the Strait of Hormuz, a vital energy route through which around one-fifth of global crude and gas supplies normally pass. The waterway remains largely closed amid the conflict.

Oil had fallen for much of last week as fears eased, but Monday’s escalation quickly restored a geopolitical risk premium to crude markets.

Meanwhile, major European stock markets and Wall Street slipped as investors also weighed hawkish signals from Federal Reserve chief Kevin Warsh over the outlook for US interest rates.

Warsh, speaking at the Jackson Hole symposium on Friday, described inflation of 3.7% as concerning and indicated that current financial conditions may not be restrictive enough, fueling expectations that higher borrowing costs could be considered.

The combination of renewed energy-market risks and uncertainty over US monetary policy added to pressure on global financial markets.