TLDR
- Military action by the United States and Israel against Iran led to an effective shutdown of the Strait of Hormuz, stopping tanker movements through a critical passage responsible for 20% of the world’s oil.
- Brent crude prices soared by as much as 13%, reaching the highest level observed since January 2025, with diesel futures climbing up to 20%.
- Saudi Aramco suspended refinery operations at Ras Tanura following a drone attack; explosions were also confirmed in Dubai, Abu Dhabi, and Kuwait City.
- Wood Mackenzie analysts caution that crude prices may surpass $100 per barrel if the strait remains closed; JPMorgan estimates a 25-day blockage could compel Middle Eastern producers to halt production.
- Shares of energy majors Exxon Mobil and Chevron climbed as market participants anticipated sustained higher oil prices, with both stocks carrying Strong Buy ratings from Wall Street.
Crude oil markets experienced significant volatility on Monday following weekend military operations by US and Israeli forces against Iran, which effectively halted tanker movements through the Strait of Hormuz.
Brent crude, the international benchmark, jumped as much as 13% to reach levels not seen since January 2025. By Monday morning, it was trading near $80 per barrel. West Texas Intermediate crude futures climbed more than 7%, reaching approximately $72 per barrel.
The Strait of Hormuz, a critical chokepoint located off Iran’s coastline, facilitates approximately 20% of global petroleum shipments. Ship operators and trading companies voluntarily suspended passage through the waterway as regional tensions escalated.
During the military exchanges, Iran’s Supreme Leader Ayatollah Ali Khamenei was reportedly killed. Iran retaliated with counterstrikes targeting Israeli positions and American military installations throughout Saudi Arabia, Qatar, the United Arab Emirates, Kuwait, and Bahrain.
Saudi Arabia’s state oil company, Saudi Aramco, temporarily shut down its Ras Tanura refinery complex following a drone attack in the vicinity. Explosions were documented in both Dubai and Abu Dhabi. According to Agence France-Presse, smoke was observed emanating from the American embassy compound in Kuwait City.
Tehran claimed to have shot down an American fighter aircraft that subsequently crashed in Kuwaiti territory. President Trump confirmed US forces destroyed nine Iranian naval vessels and indicated military operations would persist until all strategic objectives were achieved.
Diesel futures experienced dramatic gains of up to 20% alongside crude oil. OPEC+, meeting as previously scheduled over the weekend, agreed to increase production quotas by 206,000 barrels daily beginning in April.
What Analysts Are Saying
Citigroup’s research team forecast Brent crude would trade within an $80-to-$90 range throughout the upcoming week. Morgan Stanley revised its second-quarter Brent projection upward to $80 per barrel from a previous estimate of $62.50.
Wood Mackenzie’s analysts suggested oil prices could breach the $100 threshold if the Hormuz passage remains inaccessible. JPMorgan’s research division cautioned that a closure lasting 25 days would likely compel major oil-producing nations to completely halt extraction activities as storage capacity reaches maximum levels.
Iran currently produces approximately 3.3 million barrels daily, representing roughly 3% of worldwide supply. Its strategic position adjacent to the strait grants it disproportionate leverage over international energy distribution.
In comments to the New York Times, President Trump indicated the United States intends to maintain military pressure on Iran for “four to five weeks.” He added that sanctions relief could be considered if new Iranian leadership demonstrated willingness to cooperate.
Energy Stocks React
Exxon Mobil shares advanced 2.67% while Chevron stock increased 1.41% as market participants rotated into energy sector equities. Both corporations are positioned to capitalize on elevated crude prices, which expand profit margins for upstream oil producers.
Exxon Mobil disclosed full-year 2025 profits of $28.8 billion, representing a decline from $33.7 billion recorded in 2024. Chevron announced fourth-quarter 2025 adjusted earnings of $1.52 per share, with quarterly revenues approaching $46.9 billion.
Wall Street maintains a Strong Buy consensus rating for both companies. The average analyst price target for Exxon stands at $144.63, while Chevron’s consensus target is $187.26, accompanied by a 4.5% dividend yield.
President Trump reiterated to the New York Times that military operations against Iran would continue, with no indication of imminent de-escalation as of Monday morning.
