TLDR
- Brent crude climbed 0.6% to reach $72.40 per barrel; WTI increased 1% to approximately $69.64–$70.07 per barrel on Monday
- Washington and Tehran exchanged military strikes during the weekend following disputes over Iran’s claims to authority in the Strait of Hormuz
- Both nations have committed to cease military action and participate in fresh diplomatic discussions in Qatar this week
- Crude markets had tumbled more than 10% the previous week following the signing of a preliminary U.S.-Iran peace agreement
- Industry experts caution that restoring oil supply could extend through the remainder of 2026 owing to vessel bottlenecks and infrastructure damage
Crude oil markets experienced upward momentum on Monday following renewed military confrontations between the United States and Iran over the weekend, which unsettled investors and cast doubt on the durability of a tentative peace agreement between Washington and Tehran.
Brent crude futures for August delivery advanced 0.6% to $72.40 per barrel during early European trading sessions. WTI contracts for September delivery posted gains of approximately 1% to $69.64 per barrel.
The upward movement follows crude reaching its weakest point in four months during the previous week. Markets had declined more than 10% after Washington and Tehran signed a preliminary peace agreement, prompting traders to remove risk premiums from crude valuations.
Weekend Military Confrontations
The two nations engaged in military exchanges throughout the latter part of last week and continuing into the weekend. The confrontations originated from disputes regarding Iran’s claims to exercise authority over the Strait of Hormuz, a critical waterway for international oil transportation.
The military exchanges disrupted vessel traffic through the Strait of Hormuz and drove prices upward on Monday. Nevertheless, gains were limited after Axios reported that both parties agreed to an immediate cessation of military activities.
Washington and Tehran have reportedly committed to conducting fresh diplomatic discussions in Qatar this week. The two governments had previously agreed to a 60-day negotiation period to pursue a more comprehensive peace settlement.
Hormuz Traffic Remains Suppressed
Prior to this weekend’s military escalation, oil shipments through Hormuz had not completely recovered. Transport volumes had approached pre-conflict levels last week, but the renewed hostilities have introduced additional uncertainty.
“While commercial shipping is expected to resume ahead of renewed peace talks, traffic through Hormuz remains below normal levels,” MUFG analyst Soojin Kim said.
ANZ analysts shared a similar assessment, cautioning that actual oil shipments remain limited by vessel backlogs, infrastructure damage, and production suspensions.
“Recovery will be gradual and asymmetric,” ANZ wrote, adding it could take the rest of 2026 for oil supplies to normalize.
An additional complication affecting diplomatic progress is the persistent conflict between Israel and the Lebanese organization Hezbollah. Tehran has insisted that Lebanon must be incorporated into any comprehensive peace settlement. Israel and Hezbollah have continued military operations in Southern Lebanon notwithstanding multiple ceasefire initiatives.
MUFG’s Kim also observed that oil prices will likely face continued downward pressure as geopolitical risk premiums dissipate and regional production gradually recovers.
The critical issue moving forward is whether Washington and Tehran can achieve consensus during their 60-day negotiation window on a comprehensive and enduring peace settlement.
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