Oil prices surged more than 4% on Monday, July 13, 2026, after fresh military strikes between the United States and Iran reignited fears over the security of energy shipments through the Strait of Hormuz. Brent crude futures climbed to $79.50 a barrel, while US West Texas Intermediate reached $74.20, marking the highest levels since late June.
Renewed Hostilities
The latest escalation came as Iran widened its military strikes to Gulf states, targeting the United Arab Emirates, Qatar, Kuwait, Oman, and Bahrain in response to US attacks. The US Central Command responded with a new wave of strikes aimed at degrading Irans ability to target vessels in the critical waterway.
Just six vessels were tracked crossing the Strait of Hormuz between Thursday and Friday last week, compared with 18-22 daily crossings earlier this month. Roughly 130 vessels normally transit the strait each day, a conduit for one-fifth of the global oil trade. The dramatic decline in traffic has sent shockwaves through energy markets.
Market Impact
The renewed fighting has thrown the future of the fragile ceasefire agreement signed last month into doubt. Oil prices had returned to pre-conflict levels following the signing of a memorandum of understanding between the US and Iran at the G7 summit in June, but the latest attacks have erased those gains and more.
The impact extends well beyond oil markets. Major Asian stock markets fell sharply on Monday, with South Koreas KOSPI plunging more than 8% and Japans Nikkei falling over 2%. The US dollar strengthened on safe-haven buying, while bond yields rose as investors priced in the possibility of interest rate hikes to combat war-fuelled inflation.
What Analysts Are Saying
Analysts warn that a prolonged closure of the Strait of Hormuz could disrupt nearly 20 million barrels per day of crude flows. Under such a scenario, oil prices could potentially surge to between $110 and $150 per barrel according to Nuvama Institutional Equities.
However, IG analyst Fabien Yip noted that prices are unlikely to approach the much higher levels seen earlier in the year. “Oils return towards pre-war levels in June reflected markets pricing in a best-case outcome. Last weeks re-escalation exposes how fragile that assumption was,” Yip said.
Saudi Aramco CEO Amin Nasser warned that any prolonged disruption could push back the return of stability in global oil markets until 2027. Industry experts say restoring normal shipping operations would require coordinated vessel movements, infrastructure repairs, and de-mining efforts that could take months.
Broader Economic Implications
The oil price spike is rekindling inflation concerns globally, just as the IMF released an update projecting global economic output growth would slow to 3% in 2026 from 3.5% last year. Higher energy costs threaten to push central banks toward further interest rate hikes, potentially slowing economic recovery in markets around the world.
For consumers, the ripple effects could be felt at the fuel pump and in higher prices for goods and services as transportation costs rise. The situation remains fluid, with all eyes on diplomatic efforts to restore the ceasefire and keep the Strait of Hormuz open for commercial traffic.
