Brent crude settled at $94.98 per barrel, up $3.86, or 4.2%, while U.S. West Texas Intermediate (WTI) crude gained $4.80, or 5.5%, to close at $92.16 per barrel. Both benchmarks had risen more than 6% during the session before trimming gains later in the day.
Iran’s Tasnim News Agency reported that Tehran and its regional allies were discussing plans to completely block the Strait of Hormuz and potentially expand disruptions to other strategic shipping routes, including the Bab el-Mandeb Strait at the southern entrance to the Red Sea.
The reports marked a sharp escalation in tensions after weeks of speculation that the United States and Iran were nearing a diplomatic agreement that could ease restrictions on maritime traffic. The conflict has already severely curtailed shipping through the Strait of Hormuz, a critical corridor that normally carries roughly one-fifth of global oil and liquefied natural gas supplies.
Markets pared some gains after President Donald Trump said he was unaware that negotiations had been formally suspended and added that intermediaries had secured assurances from Hezbollah that it would not launch attacks against Israel.
Despite Monday’s rally, both oil benchmarks finished May sharply lower. Brent and WTI declined between 17% and 19% during the month, marking their largest monthly drops since March 2020, as traders repeatedly priced in expectations of a ceasefire and eventual reopening of regional shipping routes.
“It just seems that both sides are in different worlds,” said Andrew Lipow of Lipow Oil Associates, warning that continued disruptions could eventually drain commercial inventories enough to trigger another sharp price spike.
The potential expansion of maritime disruptions beyond Hormuz has become a growing concern. The Bab el-Mandeb Strait serves as a key route for Middle Eastern exports, with an estimated 4 to 6 million barrels per day of Saudi crude moving through the passage.
Shipping executives meeting in Athens on Monday said any future peace agreement would need to provide clear guarantees and operating rules before commercial vessels could confidently resume normal transit through the region.
Beyond geopolitical concerns, traders also continued to monitor economic conditions. Weak manufacturing data from China raised questions about demand growth in the world’s second-largest oil consumer, while Goldman Sachs noted that softer consumption in China and Europe could weigh on prices later in the year despite ongoing supply disruptions.
Meanwhile, expectations remain for another drawdown in U.S. petroleum inventories. Analysts surveyed by Reuters estimate crude stockpiles fell by approximately 3.6 million barrels last week, with gasoline and distillate inventories also likely declining.
Additional supply developments included Kazakhstan restoring production at the Tengiz oil field and Venezuela increasing exports for a third consecutive month, supported by higher shipments to the United States, India, and Europe.