Iran asserts Strait of Hormuz control, pushing oil above $69

Iran's claim of exclusive authority over Strait of Hormuz traffic threatens to choke off a waterway that once carried a fifth of the world's oil.

Iran's assertion of exclusive control over the Strait of Hormuz pushed oil higher Monday as traders reassessed the odds of a quick recovery in Persian Gulf supply following days of tit-for-tat strikes with the US.

"The market is likely to re-evaluate its assumption of a quick recovery of oil supply from the Persian Gulf," ANZ Research analysts said in a report.

Front-month WTI crude rose 0.8% to $69.78 a barrel, while Brent gained 0.4% to $72.27. Shipping traffic through the strait has collapsed to just 10 vessels a day, down from 40 to 50 earlier last week and far below the historical average of more than 130 ships daily before the war began, according to maritime intelligence firm Kpler.

The standoff threatens to unravel the fragile cease-fire less than two weeks after the US and Iran signed a memorandum of understanding in Switzerland. With Iran vowing to charge tolls after a 30-day management period and the US rejecting any restrictions on the international waterway, the two sides remain far apart on the most basic terms of their interim deal.

Iranian Foreign Minister Abbas Araghchi said Sunday that Tehran will exercise sole management of the strait for the next 30 days before allowing full traffic to resume, warning that any attempt to establish alternative routes would increase tensions. The Islamic Revolutionary Guard Corps has already attacked two commercial vessels this week that attempted to use a US-backed alternate route hugging Oman's coast, including the Singapore-flagged Ever Lovely and the Panama-flagged tanker M/T Kiku.

The US responded by striking Iranian missile and drone storage facilities, radar sites, and coastal infrastructure. President Donald Trump accused Iran of violating the cease-fire and warned that the US could "militarily complete the job," while Vice President JD Vance said "violence will be met with violence." Iran retaliated by launching drones and missiles at US military sites in Bahrain and Kuwait, though a US official said no American assets were hit.

Oil Supply Risk Returns to the Fore

The last time the strait faced a sustained disruption, during the early months of the war, Brent crude surged above $100 a barrel before settling into a $70-to-$80 range as the US and Iran established an uneasy truce. The current escalation threatens to reverse that stabilization, with shipping experts warning that renewed attacks will keep vessels too afraid to cross.

Commercial shipping companies now face a dilemma: use the US-backed Omani route and risk Iranian attacks, or use Iran's designated channel and risk Western sanctions for transacting with the IRGC. Many vessels have switched off their transponders to slip through undetected, but the mere threat of attacks has been enough to scare away the vast majority of traffic.

Pakistan, a key mediator, said talks between the US and Iran would resume Tuesday, and a US official told CBS News that negotiations were set to continue. But Iran's Revolutionary Guard has threatened a complete halt to the process if the US continues its strikes, and the two sides remain at odds over the strait's governance, the unfreezing of Iranian funds, and the future of Iran's enriched uranium stockpile.

The standoff also threatens to complicate the broader regional picture. Iran has demanded that Israel withdraw from southern Lebanon under the terms of the MOU, while Israel insists it will maintain a security zone until Hezbollah is disarmed — a condition the Iran-backed group has rejected.

This article is for informational purposes only and does not constitute investment advice.