Oil prices rose about 5% on Monday, May 4, after Iran’s Fars news agency reported an incident involving a U.S. warship in the Strait of Hormuz, sparking concerns about a prolonged disruption to the vital oil transit route.
Brent crude futures were up $5.52, or 5.1%, at $113.69 a barrel by 1025 GMT, having settled down $2.23 on Friday. U.S. West Texas Intermediate was up $5.10, or 5%, at $107.04 a barrel, after a $3.13 loss on Friday.
A U.S. warship intending to pass through the Strait was turned back after ignoring Iran’s warning, Fars reported on Monday, citing local sources, adding that two missiles hit it when it was sailing near Jask. Iran’s navy also said it had prevented U.S. warships from entering the Strait of Hormuz.
Reuters could not independently verify the reports. There was no immediate response from the United States, but Axios cited a senior U.S. official denying that a U.S. ship was hit. Prices were already trading up in the session on continued disruptions to oil supplies through the strait.
“The path for prices remains skewed to the upside as long as flows through the Strait remain restricted,” UBS analyst Giovanni Staunovo said.
President Donald Trump said the U.S. would begin efforts to assist ships stranded in the Strait of Hormuz, but prices stayed above $100 a barrel, with no peace deal in sight and shipping through the strategic waterway still constrained.
Iran’s military, in response, warned U.S. forces on Monday not to enter the strait, adding that its forces would “respond harshly” to any threat.
Trump has made securing a nuclear deal with Tehran a priority, but Iran wants to defer nuclear talks until after the war and first lifts rival blockades on Gulf shipping.
Meanwhile, the United Kingdom Maritime Trade Operations agency said on Monday that a tanker had reported being hit by unknown projectiles while transiting near Fujairah in the United Arab Emirates.
On Sunday, the Organisation of the Petroleum Exporting Countries and its allies, known as OPEC+, said it would raise oil output targets by 188,000 barrels per day in June for seven members, marking the third consecutive monthly increase.
The rise matches that agreed for May, minus the share of the United Arab Emirates, which left OPEC on May 1. However, the additional barrels are expected to remain largely on paper as long as the Iran war continues to disrupt Gulf oil supplies through the Strait of Hormuz.
