Oil prices rose on Monday after the United States and Iran exchanged fresh strikes, reviving concerns over crude supplies through the Strait of Hormuz, a key shipping route that carries about one-fifth of the world's oil.
Brent crude futures rose 3.5% to $78.67 a barrel, moving towards $79, while U.S. West Texas Intermediate crude futures gained 3.4% to $73.87 a barrel.
The latest escalation has renewed a risk premium in oil prices after markets had pared earlier gains following an interim peace agreement between Washington and Tehran. The renewed fighting has also raised concerns about global oil supplies, with uncertainty over whether the Strait of Hormuz remains fully open to commercial shipping.
Iran said the strait had been closed "until further notice", but the U.S. military rejected that claim. U.S. Central Command (Centcom) said the waterway remained open to vessels lawfully transiting the area.
"U.S. forces are positioned and prepared to ensure that freedom of navigation remains available despite unwarranted Iranian aggression, harassment, threats, and arbitrary declarations," Centcom said in a social media post. "Iran does not control the strait. Traffic is flowing."
President Donald Trump also said the Strait of Hormuz remained open during an interview with NBC News' "Meet the Press" broadcast on Sunday.
Centcom said U.S. forces carried out another round of strikes against Iran on Sunday after attacking about 140 targets on Saturday. It said the latest operation responded to an attack by Iran's Islamic Revolutionary Guard Corps on a container ship transiting the Strait of Hormuz. CNN reported that the Revolutionary Guard had again targeted commercial vessels and that U.S. aircraft intercepted an Iranian cruise missile and an attack drone.
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Iran responded with strikes on U.S. military facilities in Jordan, Kuwait, Bahrain and Oman, according to the state news agency Tasnim. Iranian media also reported explosions east of Bandar Abbas, near the Strait of Hormuz. The Islamic Republic launched retaliatory drone and missile attacks on U.S. allies across the Middle East, including Kuwait, Jordan and Qatar.
The latest U.S. strikes marked the fourth round of attacks in a week. The fighting stems from disagreements between Washington and Tehran over how the Strait of Hormuz should operate under an interim peace agreement signed on June 17.
Shipping through the strait remained limited on Monday, extending a slowdown that began after tensions intensified last week. The Joint Maritime Information Center said the southern shipping lane coordinated by Oman remained available for inbound and outbound traffic, but described the security situation as severe and urged mariners to exercise "extreme vigilance".
Iran has demanded that ships use a northern route through its territorial waters as it asserts control over the strait.
The latest escalation has also weakened hopes of a diplomatic breakthrough. Iran's Parliament Speaker and chief negotiator Mohammad Bagher Ghalibaf said the "era of one-sided deals is OVER". Tehran said Washington must first honour previous commitments on Strait of Hormuz transits and the normalisation of Iranian oil exports before negotiations could resume. Trump, meanwhile, said the ceasefire was "OVER" but added that the United States remained willing to continue talks.
Before the conflict escalated earlier this year, about 20% of the world's oil supplies moved through the Strait of Hormuz. Ship traffic fell after Iran began targeting vessels in early March but had started to recover following the interim agreement between the two countries.
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