Oil prices rose during Monday's Asian trade as market participants monitored renewed military exchanges between the United States and Iran over the weekend, testing an already fragile interim peace agreement and again disrupting shipping through the Strait of Hormuz.
By 2:50 pm AEST (4:50 am GMT), Brent crude futures for September delivery had gained 63 cents, or 0.9%, to US$73.23 a barrel, while U.S. West Texas Intermediate crude for August rose 81 cents, or 1.2%, to $70.04 a barrel.
The gains followed a sharp sell-off last week, when Brent crude fell 10.6% for its third consecutive weekly decline as crude shipments through the Strait of Hormuz climbed to their highest level since the U.S.-Israeli conflict with Iran began in late February.
However, tanker traffic has since slowed after renewed attacks on vessels in the strategic waterway from Thursday, including an attack involving a Qatar-linked oil tanker, prompting retaliatory military strikes by both Washington and Tehran in the most significant escalation since the two sides agreed to an interim peace deal.
ING commodities strategists noted in The Commodities Feed that recent market moves suggested traders were underestimating the risks to global supply.
"Participants appear to be shrugging off these developments, instead focusing on what a continued recovery in oil flows would mean for the global balance. This complacency is odd and clearly leaves significant upside risk if the supply recovery proves slow – or if we see significant re-escalation.
"While the oil market is technically in oversold territory, momentum appears to still be to the downside. The latest positioning data shows that speculators reduced their net long in ICE Brent by 23,790 lots over the last reporting week, leaving them with a net long of 90,338 lots as of last Tuesday.
"This is the smallest position that speculators have held since mid-December 2025, when the market was fully focused on the 2026 surplus expectations.
"The move over the week was driven by longs liquidating, with them selling 52,097 lots, while there was also a smaller share of short covering."
Oil's advance was tempered after a U.S. official reportedly said Iran and the United States had agreed to halt recent hostilities in the Gulf and resume discussions.
ANZ analysts commented in a note to clients:
"The sense of calm in the Middle East is likely to be tested after U.S. and Iran traded attacks over the weekend.
"The Islamic Revolutionary Guard Corps said it launched missiles and drones on a U.S. air base in Kuwait. The U.S. said it struck a multitude of Iranian military sites. This came after a vessel carrying Qatari oil was attacked."
The bank also warned that expectations for a rapid recovery in oil supplies could prove overly optimistic.
"The market is likely to re-evaluate its assumption of a quick recovery of oil supply from the Persian Gulf. Despite the U.S.-Iran deal marking an inflection point for oil markets, physical flows are constrained by tanker backlogs, damaged infrastructure and production shut-ins.
"Recovery will be gradual and asymmetric. Moreover, it could take the remainder of the year before supply is near pre-conflict levels."
Meanwhile, Saudi oil producer Aramco resumed crude loadings at its Ras Tanura export terminal on Friday after operations had been suspended for almost four months, as producers increased output and exports ahead of the interim agreement.
Loading operations continued despite a company helicopter crashing at Ras Tanura on Sunday, killing 14 people.
The cause of the crash was not immediately known.



