Oil Prices Surge on Geopolitical Tensions
Global oil prices climbed more than 2% on Monday following fresh military strikes between the United States and Iran. This renewed hostility heightened concerns over the security of energy shipments through the Strait of Hormuz, a crucial global oil transit route.
Brent crude futures gained $1.67, or 2.2%, to trade at $77.68 per barrel as of 09:55 GMT. Concurrently, U.S. West Texas Intermediate (WTI) crude rose $1.59, or 2.23%, to $73.00 a barrel.
The rally was triggered by renewed hostilities over the weekend, with both countries launching military strikes. These actions reignited fears of disruptions to global oil supplies.
Strait of Hormuz at the Centre
Iran reportedly targeted U.S. facilities across the Gulf on Sunday and announced the closure of the Strait of Hormuz. This waterway is one of the world’s most strategically important energy chokepoints.
On Monday, Iran’s Revolutionary Guards stated they had carried out attacks on U.S. military bases in Kuwait and Bahrain, further escalating regional tensions. Before the conflict erupted in late February, the Strait of Hormuz handled roughly one-fifth of global daily oil and liquefied natural gas exports.
Ship-tracking data indicated vessel traffic through the strait fell to a five-week low on Sunday. According to Kpler data, only six vessels transited the waterway during the day.
The renewed hostilities have also cast uncertainty over an interim agreement signed by Washington and Tehran last month. This deal aimed to reopen the strait and pave the way for an end to the conflict after an additional 60 days of negotiations.
Trump Asserts Waterway Remains Open
Despite Iran’s announcement, U.S. President Donald Trump maintained that the Strait of Hormuz remains open to commercial traffic. Speaking during an interview on Sunday, Trump stated the waterway was operational despite earlier reports of restrictions.
He noted, “It’s open, and I don’t want to talk about it, because I want to honor the life of Lindsey Graham.” Trump added, “It’s open, we bombed the hell out of them last night, they’re very, very evil and sick people.”
He further commented on a recent deal, saying, “We had meetings with them… they agreed to a deal yesterday, a perfect deal for us. No nuclear, no this, no that, no nothing. They gave up everything and then after that they left the room and then within an hour they launched a drone at a ship.”
Future Supply Resilience and Iranian Exports
Analysts at Goldman Sachs suggested that expanding pipeline infrastructure across the Middle East could significantly reduce the impact of future disruptions in the Strait of Hormuz. The investment bank projects that more than 60% of Gulf oil exports could eventually bypass the strait if planned pipeline projects are completed.
Goldman Sachs forecasts alternative pipeline capacity will increase by 3.8 million barrels per day by the end of 2027. This capacity is expected to reach a cumulative 7.3 million barrels per day by the end of 2028.
This expansion would raise the region’s effective bypass capacity to more than 14 million barrels per day, enhancing resilience against geopolitical disruptions. Meanwhile, Iranian crude supplies stored at sea have increased after Tehran boosted exports during the temporary peace arrangement with the United States.
However, demand for Iranian crude has reportedly softened as China’s independent refiners increasingly opt for cheaper supplies from Iraq, the United Arab Emirates, and Qatar. Separately, the Abu Dhabi National Oil Company (ADNOC) set the August official selling price of its benchmark Murban crude at $80.01 per barrel, a sharp decrease from $101.48 per barrel in the previous month.
Nigeria's Production Boost
The latest rise in oil prices coincides with Nigeria recording its strongest crude production performance in six years. According to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), the country produced an average of 1.56 million barrels of crude oil per day in June 2026.
This figure represents the highest monthly output since April 2020 and exceeded Nigeria’s OPEC quota of 1.5 million barrels per day, indicating 104% compliance with the target. Combined crude oil and condensate production also increased to 1.735 million barrels per day.
This production level provides a potential boost to government revenues at a time of elevated global oil prices. With Middle East tensions showing little sign of easing, market participants will continue to monitor developments around the Strait of Hormuz, as prolonged disruption could significantly impact global energy supply and prices.
