Volatility has returned to rock the global energy market as oil prices hit 90 US dollars a barrel after fresh American military airstrikes on Iran.
The price of Brent crude oil rose by about 1.5% to surpass 90 dollars a barrel at one point on Monday morning for the first time since early June.
It then fell to around 88 dollars a barrel, parring back the earlier gains following new reports of diplomatic exchanges aimed at de-escalating tensions between the US and Iran.
Oil prices remain below the levels reached during the height of the crisis in April, when Brent crude peaked at about 120 dollars a barrel, but have been rising again since the beginning of July.
This has coincided with hostilities flaring up in the Middle East and a fragile interim ceasefire between the US and Iran breaking down.
Early on Monday, the US conducted attacks targeting Iran including military and air defence sites and communication networks after announcing the death of another service member killed in Iraq on Saturday.
Iran retaliated by launching an attack targeting Bahrain, the home of the US navy’s fifth fleet.
Shipping traffic including oil tankers in the Strait of Hormuz has largely stalled amid the latest attacks, sparking fresh turmoil in global energy markets.
Reports in Reuters also said that Iran has called on Houthi rebels in Yemen to close down the Bab el-Mandeb Strait in the Red Sea if the US attacks Iranian power infrastructure, which would cause fresh disruption to international shipping.
Susannah Streeter, chief investment strategist for Wealth Club, said: “Brent crude has set off on a hot streak, trading around 90 US dollars a barrel as military action has intensified between the US and Iran.
“That’s an increase of 30% from lows seen earlier in the month.
“Already the latest attacks have expanded beyond military targets, with bridges, utilities and port facilities coming under attack, and the countdown is on to an even wider escalation, given that President Trump has vowed to increase attacks on Iranian infrastructure on Wednesday.
“This could trigger further retaliation, ensnaring the region in an even more complex situation.
“The conflict appears to be becoming more fractious by the day, and with Iranian forces launching fresh attacks on what it considers to be US allies across the region, restoring longer-term stability looks to be an ambition increasingly out of reach.”
