Global oil prices surged by more than 4% on Monday as renewed military action between the United States and Iran intensified concerns over the security of energy shipments through the strategically important Strait of Hormuz.
Brent crude futures rose by $3.10, or 4.08%, to $79.11 a barrel, while US West Texas Intermediate (WTI) crude climbed $2.95, or 4.11%, to $74.36 during early trading.
The gains came after the US Central Command confirmed that American forces carried out another wave of strikes against multiple targets in Iran on Sunday, using precision-guided munitions. In response, Iran's Revolutionary Guards said they had launched attacks on US military bases in Kuwait and Bahrain.
The renewed hostilities have heightened uncertainty over shipping through the Strait of Hormuz, one of the world's most critical energy trade routes.
US President Donald Trump said on Sunday that the waterway remained open to commercial traffic. However, Iranian authorities had earlier announced the closure of the strait after claiming a vessel used an unauthorised route and was subsequently targeted.
Before the conflict erupted in late February, around 20% of the world's oil and liquefied natural gas supplies passed through the Strait of Hormuz.
According to ship-tracking firm Kpler, only six vessels transited the strait on Sunday, marking the lowest daily traffic recorded in five weeks.
The latest escalation has also cast doubt over the future of an interim agreement signed between the United States and Iran last month, which sought to reopen the vital shipping route and pave the way for further negotiations aimed at ending the conflict.
Despite the agreement, the International Energy Agency (IEA) reported that while global oil supply increased by 4.1 million barrels per day in June, production remained 9.4 million barrels per day below pre-war levels.
Analysts say the renewed military exchanges have dampened hopes of a swift resolution.
"Hopes of a relatively quick resolution to the recent skirmishes may be in doubt after tensions escalated over the weekend," ANZ analysts said in a market note.
IG market analyst Tony Sycamore said the relatively modest rise in oil prices suggested investors still believed the latest violence represented an escalation within an already fragile truce, rather than a complete collapse of the ceasefire.
"How accurate that view is remains to be seen," Sycamore said.
Market participants continue to closely monitor developments in the Middle East, with any prolonged disruption to oil flows through the Strait of Hormuz expected to have significant implications for global energy markets and fuel prices.