Global oil prices soared nearly 10% on Monday and extended gains on Tuesday after President Donald Trump reinstated a U.S. naval blockade on Iran and proposed a 20% fee on all cargo transiting the Strait of Hormuz. Brent crude futures rose 2.7% to $85.57 per barrel, while West Texas Intermediate climbed 3% to $80.46, both hitting their highest levels in about a month.
The rally was fueled by escalating military tensions: Iran struck two UAE tankers with cruise missiles in Omani waters, killing one crew member and wounding eight. U.S. forces carried out a third consecutive night of strikes against Iranian assets, and the Houthi movement in Yemen fired missiles at Saudi Arabia. Tanker traffic through the Strait, which handles roughly one-fifth of global oil consumption, dropped to its lowest level in two months.
The surge in crude prices lifted energy stocks sharply. BP shares jumped to 505p, their highest since June 22 and 12.2% above the year’s low. Shell stock rose to 3,109p, up 8.6% from its July low. U.S. majors like Chevron, ExxonMobil, and Marathon Petroleum also rallied, with the Vanguard Energy ETF (VDE) hitting $161.5, a near 9% rebound from its yearly trough. ExxonMobil noted its Q2 earnings will see a $5 billion boost, while Shell increased its integrated gas output guidance.
Analysts warned that further disruptions could push prices even higher. ING estimated the 20% transit fee could add roughly $16 per barrel to shipping costs. A top Exxon executive had earlier cautioned that inventories were approaching “unheard of” lows and that Brent and WTI could spike to $150-$160 if stocks keep falling. The hostility also reignited fears of attacks on regional energy infrastructure, which the U.S. military may struggle to fully contain.
