Brent crude rose above $97 a barrel on Monday, its highest since July, after the US struck three Iranian oil tankers over the weekend in retaliation for ballistic missile attacks on American Navy warships. Tehran answered with attacks on tankers and vessels linked to the US and said it would declare a restricted maritime zone beyond the Strait of Hormuz in the coming days.
Brent traded at $97.36, up 1.1% on the day. The benchmark is up 11% in a month and 47% year over year. WTI rose to $92.39. Fighting between the two sides resumed last week after roughly a month of relative calm, and oil prices have climbed about 10% since.
Hormuz at the center again
About a fifth of the world’s oil passes through the Strait of Hormuz, and both governments are now treating the waterway as a lever. Iran repeated its six conditions for reopening the strait, which has effectively stayed closed to much commercial traffic as ships avoid the gulf. US Energy Secretary Chris Wright said the US would maintain its naval presence in the region, including the blockade designed to curb Iranian oil exports and escort commercial vessels.
Iran said it was nearing the end of negotiations with Oman for a new route through the strait, though the details of any such arrangement remain unclear. Insurance rates for gulf shipments have climbed sharply, and several major shipping lines have suspended transits until the security picture clears.
| Benchmark | Price | Day change | Month | Year |
|---|---|---|---|---|
| Brent | $97.36 | +1.12% | +10.99% | +47.47% |
| WTI | $92.39 | +0.99% | +12.49% | +48.39% |
| Natural gas | $2.94 | -1.29% | +5.10% | -4.97% |
Inflation math gets harder
The oil spike lands at a bad moment for central banks. The Federal Reserve’s September meeting is days away, and prediction markets had been pricing a rate hike at 62 to 68% odds before the latest escalation. Every $10 move in crude adds roughly a quarter percentage point to headline inflation measures over the following months, which argues for the hawkish side of that bet.
Treasury yields have climbed along with oil, and the stronger dollar is weighing on gold, which fell toward $4,300 despite its usual role as a geopolitical hedge. The pattern of this conflict has been consistent: oil up, yields up, dollar up, and risk assets from equities to bitcoin choppy. Bitcoin pushed through $81,000 last week before retreating to the $79,000 range, holding up better than most risk assets as ETF inflows offset macro pressure.
Emerging markets are the most exposed. India imports most of its crude and has watched the rupee weaken as oil bills climb. The RBI kept its repo rate unchanged in August and now faces the question of whether energy inflation forces a rethink. European importers face a similar squeeze, with the euro-area economy already running close to stagnation.
What would de-escalate it
Neither side has shown an obvious off-ramp. The US blockade of Iranian oil exports is the stated grievance, and Tehran’s tanker attacks and the planned restricted zone are responses to it. Previous rounds of escalation faded after a few weeks when strikes stayed limited to military and shipping targets and avoided populated areas or major infrastructure. The resumption last week followed missile attacks on US warships, which marked an escalation in itself.
Traders will watch three things this week: whether Iran actually declares the restricted zone, whether US strikes expand beyond tankers to port or export infrastructure, and any signal from the Fed on how much of the oil move it treats as durable. Brent’s quarterly forecast sits near $97, which suggests most models assume the disruption persists rather than resolves.
For consumers, the pass-through to gasoline is already visible, with US pump prices up in recent weeks. For airlines and chemical makers, the squeeze compounds. The last time Brent traded this high, in July, the market corrected quickly when diplomatic channels opened. Whether that repeats depends on decisions in Washington and Tehran in the next few days.
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