Oil prices surge above $90 as two tankers explode in Strait of Hormuz

The US and Iran conflict has shown no sign of subsiding as both sides have been exchanging military strikes for the past few weeks, hitting civilian infrastructure and taking innocent lives.

In a recent dramatic development, the Islamic Revolutionary Guard Corps said on Monday that two oil tankers “had exploded and been immobilised after attempting to transit through the southern route through the Strait of Hormuz.”

This southern route in the strategically important Hormuz is largely controlled by Iranian authorities and threatened to take actions against those ships that pass through on the encouragement of the US military.

The statement reported by Reuters gave no details on the vessels' names, flags, crews or any casualties.

In the wake of growing conflict in the region’s maritime chokepoints and restricted oil shipments through Hormuz, the Brent oil surges 2 percent to more than $90 per barrel on Monday.

Brent crude futures rose by $2.09 to reach $90.19, marking its highest level since June 11. This surge continues a strong upward trend, following a 15.9 percent increase last week.

Similarly, US West Texas Intermediate (WTI) crude climbed $1.71 (2.07 percent) to $84.20 per barrel, hitting its highest point since June 12

WTI follows a robust performance last week, where it recorded a 15.5% gain, its largest weekly jump since early March.

Given the escalation of conflict in the Middle East, the prospects of spiking oil prices are more evident.

“ICE Brent broke above $90 per barrel this morning with no let-up in the escalation in the Gulf,” said ING analysts in a note on Monday.

According to Barclays analyst Amarpreet Singh, “The coming days and weeks will provide a clearer picture of the sustainable level of oil exports from the region under renewed dual blockades.”

“As things stand, we think oil markets are still too complacent about the potential fallout for inventories, which, unlike at the beginning of the war, are at the tightest of the past five years.”