Oil prices increased on Monday, following statements from former US President Donald Trump indicating Iran would face severe consequences for the deaths of three American soldiers, coupled with an announcement of a maritime embargo against Saudi Arabia by Yemen's Houthi rebels.
The international benchmark Brent crude futures rose approximately 1.3%, settling at $89.22 per barrel. US West Texas Intermediate crude futures gained 0.9%, closing at $83.23 per barrel. Prices have surged around 20% this month as hostilities between the US and Iran have escalated sharply.
Trump posted on Truth Social, stating, "Every time Iran kills an American soldier, they will pay many times over! This directive has been communicated to War Minister Pete Hegseth, Chairman of the Joint Chiefs of Staff Daniel Keane, and every leader in the military."
After the US confirmed at least three soldiers were killed in recent fighting with Iran, Brent crude spiked nearly 4% overnight, surpassing $90 per barrel. Prices later moderated when Iranian Foreign Ministry spokesman Esmail Baghaei indicated Tehran was open to negotiations with the US based on its interests.
Simultaneously, Iran's Houthi allies in Yemen declared a maritime embargo against Saudi Arabia on Monday. This embargo could exacerbate oil supply disruptions already triggered by Iranian attacks on tankers in the Strait of Hormuz. The Houthis have repeatedly threatened to close the Bab el-Mandeb Strait, which connects the Red Sea to global markets.
Saudi Arabia has diverted several million barrels of oil per day via pipeline to an export terminal on the Red Sea. During the US-Iran conflict, these exports have served as a crucial pressure relief valve for the global crude market.
The US conducted airstrikes against Iran for nine consecutive nights in retaliation for multiple Iranian attacks on tankers transiting the Strait of Hormuz. Tehran has sought to compel vessels to navigate the strait through its territorial waters. This month, its assaults have resulted in at least two seafarers killed and over a dozen injured.
According to a Sunday report from the UK Maritime Trade Operations centre, a product tanker off the coast of Oman was struck by a projectile over the weekend, causing a fire on board. The UKMTO stated the crew safely abandoned the vessel and were rescued by a tugboat.
The United Nations agency, the International Maritime Organization, identified the tanker as the Malta-flagged vessel "Kavomaleas."
Iran has responded to US strikes by launching missiles at Washington's allies in the Middle East. As reported by the Kuwait Times, Tehran targeted a power and desalination plant in Kuwait over the weekend, marking its second attack within two days. Kuwait relies heavily on such facilities for its drinking water supply.
Data from the American Automobile Association shows that as US crude has jumped 18% this month, gasoline prices climbed back to $4 per gallon on Monday. The last time pump prices reached this level was on June 17, when the US and Iran signed an interim agreement aimed at reopening the strait and halting hostilities.
Amrita Sen, Founder and Research Director at Energy Aspects, suggested that a significant slowdown in shipping through the Strait of Hormuz, combined with depleting global inventories, could push oil prices above $100 per barrel.
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