Oil Prices Surge Past $90 as US and Iran Exchange New Strikes and Washington Threatens Further Sanctions

Oil prices climbed on Monday morning following direct military exchanges between the US and Iran for the first time in a month, alongside new threats from Washington to escalate economic pressure on Tehran's trading allies. Brent crude rose 2.24 per cent to reach $90.07 a barrel at 7.19am UAE time, while West Texas Intermediate increased by 1.94 per cent to trade at $85.02 a barrel.

The military escalation began on Sunday when US forces targeted Iranian rocket launchers on Larak Island near the Strait of Hormuz. A US official stated that the action was taken because Iran's Islamic Revolutionary Guard Corps was preparing to launch rockets carrying sea mines into the vital shipping lane. In response, Iranian media reported that strikes were launched against two US bases in Jordan, though the Jordanian military confirmed that eight missiles were intercepted.

Adding to market tensions, US President Donald Trump posted a brief statement on Truth Social warning that Kharg Island was "being blown to smithereens," without providing further specifics. Kharg Island handles roughly 90 per cent of Iran’s oil exports, boasting a loading capacity of 7 million barrels per day and a storage capacity of 30 million barrels.

In the financial sector, US Treasury Secretary Scott Bessent announced to Reuters on Sunday that new secondary sanctions targeting Iran's trading partners are expected to be introduced on a weekly basis. "We're starting with the banks, and we're telling the banks it's not okay to have Iranian money and to aid the regime," Mr Bessent said.

Crude oil markets have experienced extreme volatility over six months of conflict, with Brent previously hitting an intraday peak of approximately $126 a barrel in April before receding as diplomatic talks briefly calmed supply disruption fears. Shipping through the Strait of Hormuz—which historically handled about a fifth of global energy exports—has declined significantly in recent days amid fears of a wider conflict.