Friday's calm did not last the weekend. Oil jumped more than 4% on Monday, with Brent for September delivery at $78.82 a barrel by mid-morning in Europe, its highest since June 22, and WTI back above $74. Prices that had drifted down to $76 on de-escalation hopes snapped a two-day losing streak and gapped higher, because over the weekend the shooting resumed, Iran declared the Strait of Hormuz closed, and for the first time in weeks a strike landed on energy infrastructure.
The war premium is climbing back. What it is not doing, at least not yet, is exploding. At $79, Brent is about 9% above where it sat before this crisis began in late February, and still far below the $126 it reached at the peak. The market is adding risk back in, incrementally, not pricing a full shutdown.
What Happened Over the Weekend
For the third weekend running, the US and Iran traded fire. On Saturday, Iran's Revolutionary Guard fired warning shots at a vessel it said was crossing without authorization, then declared the strait closed until further notice. US Central Command says Iran struck the Cyprus-flagged container ship GFS Galaxy, damaging its engine room and forcing the crew to abandon ship. That the target was a container ship, not a tanker, matters: it signals a threat to all traffic through Hormuz, not just oil.
CENTCOM answered on Sunday with what it called dozens of strikes on Iran's ability to attack shipping, hitting missile batteries, air defenses, and fast-attack boats at sites including Qeshm Island. Iranian state media reported one navy officer killed, a figure that has not been independently confirmed. Iran launched its own missiles and drones toward US partners across the Gulf, in the UAE, Qatar, Kuwait, Oman, and Bahrain.
The most consequential hit for the oil market was in Kuwait. A Kuwait Oil Company offshore drilling platform was struck by a drone, causing damage and injuring a worker, according to Kuwait's defense ministry, which attributed the attack to Iran-aligned forces. It was the first direct strike on energy infrastructure in weeks, and a reminder that the conflict can reach the barrels themselves, not just the ships that carry them.
The Strike That Still Hasn't Come
For all of that, the market's true worst case has still not materialized. No strike has hit Kharg Island, the terminal that handles roughly 90% of Iran's crude exports, and no Iranian oil-export infrastructure has been destroyed. Trump threatened Kharg and a naval blockade last week and has not acted on either. As long as Kharg stands and Iranian barrels keep loading, the disruption is about the route, not the source.
That distinction is why $79 is not $110. A closed strait raises the cost and danger of moving oil. A burning export terminal removes the oil itself. The market is pricing the first, not the second.
Hormuz Is Emptying
Whether the strait is legally open is now a dispute in itself. Iran says closed; CENTCOM says it remains open to commercial shipping. The traffic data splits the difference toward Iran's version in practice. Only six vessels were tracked crossing Hormuz in one twelve-hour window late last week, against 18 to 22 daily earlier this month and a peacetime norm near 130. War-risk insurance premiums have climbed to several times their pre-crisis level, and many owners are simply staying away, wary of mines and an unfinished peace.
Empty but disputed is the state of the strait. Flows are choked, not cut.
The Glut Still Sets the Ceiling
The reason the premium keeps getting capped is unchanged. OPEC+ agreed this month to add another 188,000 barrels a day from August, its fifth straight monthly increase, and Saudi Aramco cut its selling price to Asia by the most in decades. That oversupply sits under the market like a floor under the fear. Analysts see Brent holding in the upper $70s through August and September, supported by the risk premium but unlikely to revisit the war peaks unless the disruption deepens.
Diplomacy is sputtering rather than dead. Qatari negotiators traveled to Iran on Friday, and foreign minister Araghchi went to Oman on Saturday specifically to discuss the strait. Another US-Iran round is expected this week, possibly in Switzerland. Iran says it will not resume talks until Washington honors its commitments on shipping and normalizes Iranian oil exports. Trump says the ceasefire is over and that he has little faith in a deal, while letting his negotiators keep talking.
For the price, the next move depends on two things: whether the mediators reopen talks before the shipping squeeze becomes a real shortfall, and whether anyone hits Kharg. Until one of those breaks, oil is likely to keep grinding higher on the risk, without the blowout the glut keeps holding back.
This article is for informational purposes only and does not constitute financial or investment advice. Oil market conditions can change rapidly. Consult a qualified financial professional before making investment decisions.