Oil prices surged on Monday after Al Jazeera reported a fresh US attack on an Iranian naval base, reversing an earlier decline as investors grew concerned about further disruption to Middle Eastern energy supplies.
Brent crude futures climbed above $110 a barrel after trading more than 1% lower earlier in the session. West Texas Intermediate (WTI) crude also moved higher, approaching $103 a barrel with a gain of nearly 1.5%.
The reversal came as the market reassessed the risk of further escalation in the conflict, which has already disrupted shipping through the strategically important Strait of Hormuz. Treasury yields also moved higher following the reports, adding to market volatility.
What happened at the Iranian naval base?
Al Jazeera reported Monday, citing Iran’s navy, that US forces had attacked the Konarak naval base along Iran’s southeastern coast.
According to the report, two light projectiles struck the military complex early in the morning, injuring two soldiers. Al Jazeera, citing the Iranian navy, also reported that a 35-millimeter cannon was the target of the US attack.
The reported incident marks a potential escalation in the conflict, particularly given US President Donald Trump’s earlier statement that his administration was not planning attacks on Iran ahead of the November 3 midterm elections.
The latest report has renewed concerns about the prospects for de-escalation and the potential consequences for energy supplies.
Treasury yields, which had remained relatively stable earlier in the session, also moved higher. The benchmark 10-year Treasury yield rose five basis points to 5.148%, while the 30-year yield climbed to 5.48%.
Supply disruptions keep oil market on edge
Concerns over energy supplies had already been mounting before Monday’s reports.
Data from analytics firm Kpler showed that average crude flows through the Gulf fell to approximately 8.5 million barrels per day last week, based on a seven-day average, compared with more than 20 million barrels per day in the preceding week.
Kpler recorded 10 attacks during the week, highlighting the growing risks facing commercial shipping in the region.
Iran has intensified attacks on tankers operating in nearby waters, further raising concerns about the movement of crude exports. Disruptions around the Strait of Hormuz have become a central concern for energy traders because of the waterway’s importance to global oil transportation.
The conflict between Saudi Arabia and Yemen’s Houthi militants presents another potential threat to regional energy infrastructure and shipping routes.
With attacks increasing and crude flows significantly below earlier levels, traders are concerned that further escalation could make the supply situation more difficult and push prices higher.
Russian supply measures fail to offset geopolitical risks
Oil had initially declined on Monday after Trump moved to ease restrictions on Russian oil, raising hopes that additional supplies could reach global markets.
The US administration’s decision to waive certain sanctions and tariffs was seen as a potential way to improve fuel availability and ease pressure on prices.
However, the reported attack on the Iranian naval base shifted market attention back toward the risks of further disruption in the Middle East.
The sharp decline in Gulf crude flows and the rising frequency of attacks on commercial vessels have added to concerns that the market may remain vulnerable to further shocks.
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