West Texas Intermediate (WTI), the U.S. crude oil benchmark, surged to approximately $72.15 during early Asian trading on Monday, reaching its highest level since February. The rally follows escalating geopolitical tensions after Israel launched strikes on two natural gas facilities in Iran, fueling fears of broader conflict and potential supply disruptions in the oil-rich region.
The upward momentum in oil prices began late last week, intensifying after a senior Iranian military commander stated on Saturday that Iran may consider closing the Strait of Hormuz—a critical chokepoint through which roughly 20% of the world’s oil passes, according to Goldman Sachs. Any disruption to the strait’s operations could significantly tighten global oil supplies and drive prices even higher.
“Geopolitical risks are once again at the forefront of energy markets,” analysts noted, emphasizing that the threat of a widened conflict could keep oil markets on edge.
However, potential headwinds to the WTI rally may emerge from renewed trade tensions. Former U.S. President Donald Trump announced plans to notify dozens of U.S. trading partners in the coming weeks of impending unilateral tariffs, with a deadline set for July 9 following a 90-day pause. The uncertainty surrounding trade policy could weigh on market sentiment and dampen demand expectations.
Investors are also closely watching upcoming economic data from China, the world’s second-largest oil consumer. May’s Retail Sales and Industrial Production figures, due later Monday, could influence market direction. A weaker-than-expected showing would likely pressure crude prices, signaling softer demand from the key Asian economy.
Oil traders remain cautious as they weigh supply risks against potential demand weakness and trade-related volatility.
