Oil Price Today (July 13): Crude oil up almost 5%, nears $80 as US, Iran unleash more strikes. $100 in sight?

Oil prices surged more than 4% on Monday after Iran widened its military strikes to Gulf states following fresh attacks by the United States, raising concerns over the security of energy shipments through the Strait of Hormuz.

Crude oil price on July 13

Brent crude futures advanced $3.34, or 4.38%, to $79.5 a barrel, while U.S. West Texas Intermediate (WTI) crude gained $3.07, or 4.30%, to $74.20 a barrel. The latest rally comes after both benchmarks climbed 5.5% last week, with WTI once again trading above $74 a barrel. European natural gas futures also rose 2.5% after markets reopened following the weekend.

Over the weekend, Tehran expanded its strikes to Qatar and the United Arab Emirates, while the United States carried out another round of attacks on Iran, marking the latest escalation in the cycle of retaliatory strikes linked to shipping through the Strait of Hormuz.

The U.S. Central Command said it launched fresh strikes at 5 PM Eastern Time on Sunday, saying the action was aimed at holding Iran accountable for attacks on commercial vessels passing through the strait.

Also read: US-Iran war: Oil flow through Hormuz rises after ceasefire, but fresh strikes spark fears, IEA says

The renewed rise in crude prices comes after oil had surrendered all of its gains from the Iran conflict following the signing of a memorandum of understanding between the United States and Iran on the sidelines of the G7 summit in France last month. The agreement included provisions to end the conflict and ensure the safe passage of commercial vessels through the Strait of Hormuz.

The latest flare-up now threatens efforts to rebuild depleted global oil inventories later this year, according to the International Energy Agency's statement issued on Friday, before the latest round of attacks.

U.S. President Donald Trump said on Sunday that the Strait of Hormuz remains open for commercial traffic. Iran, however, had earlier declared the waterway closed after a vessel travelling on what it described as an unapproved route was struck.

The latest escalation has also clouded the future of the interim agreement signed by the United States and Iran last month, which sought to reopen the strait and bring the conflict to an end after a further 60 days of negotiations.

According to the International Energy Agency's monthly report released on Friday, global oil supply increased by 4.1 million barrels per day in June following the agreement. Even so, production remained 9.4 million barrels per day below pre-war levels.

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Will prices rise further?

Analysts said the market remains on edge. Nuvama Institutional Equities said a prolonged closure of the Strait of Hormuz could disrupt nearly 20 million barrels per day of crude flows. Under such a scenario, oil prices could potentially surge to between $110 and $150 per barrel.

"The latest developments have effectively thrown the future of the 60-day negotiation process into doubt," Bjarne Schieldrop, chief commodities analyst at SEB, told Reuters. "In my view, a price closer to $80 a barrel is more consistent with current market fundamentals than $70," he added.

Last month, Saudi Aramco Chief Executive Officer Amin Nasser warned that any prolonged disruption in the Strait of Hormuz could push back the return of stability in global oil markets until 2027. He said an extended disruption could affect nearly 100 million barrels of oil supply every week. Saudi Aramco is the world's largest oil producer.

Industry experts believe normal shipping activity through the Strait of Hormuz is unlikely to resume anytime soon. They said restoring operations would require coordinated vessel movements, the restart of oil production, repairs to damaged infrastructure and agreements on de-mining efforts. Many shipowners also remain hesitant to return to the Strait of Hormuz and the wider Persian Gulf.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)