Oil Prices Jump 6% as Hormuz Closure, Iran Tensions Renew Supply Fear

Oil prices rallied sharply Monday, with West Texas Intermediate (WTI) crude climbing $4.99 to $87.58 per barrel, a gain of 6.04%, according to live price data. Brent crude rose $5.18 to $95.56. The rally was driven by renewed escalation in U.S.-Iran tensions and a sustained closure of the Strait of Hormuz, a critical global oil transit route.

According to OilPrice.com, shipping in the Strait of Hormuz has ground to a halt again after a brief opening Friday, with Iran warning the closure will remain until a U.S. blockade is lifted. The report states over 600 million barrels of oil are now estimated to be stranded behind the strait. U.S. President Donald Trump escalated rhetoric on Sunday, posting on Truth Social that if Iran does not accept a deal, the U.S. would "knock out every single Power Plant, and every single Bridge" in Iran. A current suspension of hostilities is set to expire Wednesday.

The price surge reverses a recent pattern of sharp sell-offs following comments that a deal was imminent, which Gary Pedersen, chairman and CEO of major physical oil trader Gunvor Group, called a "masterclass" in political messaging in an interview with the Financial Times. Pedersen warned the market could be "very choppy" for months, citing seasonally softer demand and Middle East turbulence. He noted physical crude supplies remain "very tight" as global buyers scramble for replacements, with a massive queue of empty supertankers heading to the U.S. to load crude.

For Bakken operators, the rally provides a immediate boost to wellhead economics. The Bakken price differential to WTI was $-3.42 Monday, meaning Bakken crude is priced around $84.16 per barrel. The higher absolute price increases cash flow for producers and can support increased drilling and completion activity in North Dakota's core shale play. However, the volatility highlighted by traders poses a planning challenge for capital budgets and hedging strategies.

The sustained closure of the Strait of Hormuz tightens the global physical market, increasing demand for non-Middle East crudes like Bakken. This structural supply disruption, beyond fleeting geopolitical headlines, could provide longer-term price support for U.S. shale producers if alternative shipping routes remain constrained.

Natural gas prices saw a modest increase Monday, rising to $2.71. While oil-driven gains are dominant, the overall energy market sentiment is being shaped by the risk of a prolonged Middle East conflict disrupting a key artery for global oil trade.