Oil prices hit 5-month high following US action against Iranian nuclear facilities

Oil prices surged more than 3% at the start of Monday’s trading session, with Brent crude hitting a five-month high of $79.33 a barrel and WTI climbing to $77.10 before paring some gains. The rally came after the US administration signaled strikes against Iranian targets. Tehran, in response, vowed to defend its interests, according to Reuters.

Iran ranks as OPEC's third-largest oil producer. Market players fear potential retaliatory measures could disrupt critical shipping routes, including the Strait of Hormuz. This is a vital waterway, accounting for roughly 20% of global crude supply flows. Iranian state TV reported the country's parliament is already discussing measures to restrict navigation in the region. While Tehran has made similar threats in the past, it has never actually implemented these restrictions.

As June Goh of Sparta Commodities noted, the current situation threatens the stability of the region's oil infrastructure. Even with alternative pipelines in place, a shutdown of the Strait could severely disrupt global supplies. Moreover, shipping companies may avoid operating in the area altogether.