Oil prices reversed course on Monday, with Brent crude surging past $110 a barrel after reports emerged of a fresh US attack on an Iranian naval base. The move erased earlier declines and underscored the market's heightened sensitivity to any escalation in the Middle East conflict.
Al Jazeera reported, citing Iran's navy, that US forces had struck the Konarak naval base on Iran's southeastern coast. Two light projectiles hit the military complex in the early morning, wounding two soldiers, and a 35-millimeter cannon was reportedly the target. The incident follows President Donald Trump's earlier statement that his administration was not planning attacks on Iran ahead of the November 3 midterm elections, raising questions about the trajectory of the conflict.
Brent futures traded above $110 after being more than 1% lower earlier in the session. West Texas Intermediate (WTI) also advanced, approaching $103 a barrel with a gain of nearly 1.5%. Treasury yields moved higher alongside oil, with the benchmark 10-year yield rising five basis points to 5.148% and the 30-year yield climbing to 5.48%, adding to market volatility.
Supply disruptions keep oil market on edge
Concerns over energy supplies had already been building before Monday's reports. Data from analytics firm Kpler showed that average crude flows through the Gulf fell to approximately 8.5 million barrels per day last week, based on a seven-day average, compared with more than 20 million barrels per day in the preceding week. Kpler recorded 10 attacks during the week, highlighting the growing risks facing commercial shipping in the region.
Iran has intensified attacks on tankers operating in nearby waters, further raising concerns about the movement of crude exports. Disruptions around the Strait of Hormuz have become a central concern for energy traders because of the waterway's importance to global oil transportation. The conflict between Saudi Arabia and Yemen's Houthi militants presents another potential threat to regional energy infrastructure and shipping routes.
With attacks increasing and crude flows significantly below earlier levels, traders are concerned that further escalation could make the supply situation more difficult and push prices higher.
Russian supply measures fail to offset geopolitical risks
Oil had initially declined on Monday after Trump moved to ease restrictions on Russian oil, raising hopes that additional supplies could reach global markets. The US administration's decision to waive certain sanctions and tariffs was seen as a potential way to improve fuel availability and ease pressure on prices.
However, the reported attack on the Iranian naval base shifted market attention back toward the risks of further disruption in the Middle East. The sharp decline in Gulf crude flows and the rising frequency of attacks on commercial vessels have added to concerns that the market may remain vulnerable to further shocks.
This article is for informational purposes only and does not constitute financial advice.
