Brent nears $110 as US-Iran conflict drives oil higher
What's the story
Oil prices witnessed a sharp spike on Monday, with Brent crude breaching the $107 per barrel mark. The surge is mainly due to rising tensions in the Middle East and fears of potential disruptions to global energy supplies. Brent crude for November delivery rose by 2.8% to $107.54 per barrel, while US benchmark West Texas Intermediate for October increased by 2.3% to $102.34 per barrel.
Market reaction
Saudi Arabia closes East-West pipeline after drone attacks
The recent spike in oil prices comes as Saudi Arabia temporarily closed its East-West pipeline after drone attacks.
A merchant vessel was also struck in the Strait of Hormuz on Sunday, killing one and injuring three others, according to Iranian authorities.
These incidents have further heightened security concerns over key export routes in the Middle East region.
Strategic control
Iran's control over the Strait of Hormuz
The Strait of Hormuz, a vital passage for global oil trade, was once free to transit. However, Iran now requires vessels to seek permission and is contemplating a plan to levy service fees.
Non-compliance with these rules often leads to Iranian strikes on ships.
The US also periodically bombs the Iranian coastline in an attempt to challenge Tehran's control over this strategic waterway.
Diplomatic standoff
Oman delays talks between Iran and Gulf states
Adding to the tensions, Oman has postponed discussions between Iran and Gulf states regarding the future of the strategic waterway.
The delay comes amid heightened fears over potential disruptions to global energy supplies from this vital route for seaborne oil trade.
The diplomatic standoff further complicates an already volatile situation in the Middle East region and its impact on global oil prices.