On Monday, WTI rose 31.4 percent to a session high of US$119.48 a barrel, while Brent rose 29 percent to US$119.50 a barrel. Before Monday’s surge, Brent was up 27 percent and WTI was up 35.6 percent last week.
“Unless oil flows from the Strait of Hormuz resume soon and regional tensions ease, prices will remain under pressure,” said Vasu Menon, managing director of investment strategy at OCBC in Singapore.
Iraq and Kuwait have begun cutting oil production, including cuts to liquefied natural gas made earlier by Qatar because the war blocked shipments from the Middle East. Analysts expect the UAE and Saudi Arabia to also soon have to cut production as they run out of oil storage.
Also boosting prices was the appointment of Mojtaba Khamenei as Iran’s supreme leader, succeeding his father Ali Khamenei, signaling that hardliners remain firmly in control of Tehran even a week after clashes with the United States and Israel.
“With the appointment of the late leader’s son as Iran’s new leader, U.S. President Donald Trump’s goal of regime change in Iran becomes more difficult,” said Satoru Yoshida, a commodities analyst at Rakuten Securities.