Oil prices jump after renewed attacks between US, Iran

Crude oil prices jumped on Monday after the U.S. attacked Iran’s Larak Island, prompting Iran to retaliate , the first known military action from either country after weeks of stalemate.

Futures for Brent crude , the international benchmark, for September rose 3.4 percent to trade at $91.09 per barrel early Monday morning, after seeing a sharp fall last week. West Texas Intermediate futures also rose 3.4 percent, with trading at $86.22 per barrel.

“The Middle East had finally gone quiet enough for oil traders to start sanding some of the war premium out of crude,” Stephen Innes of SPI Asset Management said, according to The Associated Press . “Then Sunday arrived, with a reminder that quiet in the Strait of Hormuz is not the same as peace.”

As crude prices rose Monday, the U.S. national average for gas rose 2 cents to $4.08, according to AAA data . Gas prices do not rise at the same pace as crude, typically increasing slowly over a few days, The New York Times reported .

Gas prices have skyrocketed in the six months since the U.S. and Israel first attacked Iran on Feb. 28. Tehran hit back by closing off the Strait of Hormuz, where around one-fifth of the world’s oil is exported.

The U.S. fired at rocket launchers on Larak Island, killing and wounding several Iranian soldiers and civilians, Iran’s Islamic Revolutionary Guard Corps (IRGC) told the Iranian state-run Fars News Network.

Iran retaliated, launching drones and missiles at bases holding U.S. military assets in Jordan and the United Arab Emirates (UAE). The UAE Defense Ministry intercepted Iranian drones, with its Foreign Ministry calling it a “ dangerous escalation .”

Both sides agreed to an interim peace deal to reopen the strait and lift the U.S. naval blockade on the strait, but attacks conducted in July led that deal to fizzle out. It officially expired earlier this month.

The strait’s closure has severely limited vessel traffic over the course of the conflict, causing jet fuel shortages and affecting inflation.

“Supply risk will persist and oil inventories will continue to deplete in the coming weeks and months,” Tamas Varga, analyst at PVM Oil Associates, told CNBC before adding that “the Iranian crisis has likely changed the security status quo in the Middle East.”

President Trump said Sunday that the U.S. will refill its Strategic Petroleum Reserve (SPR) after locking in an oil deal with Venezuela to control more than 65 billion barrels of oil from the South American country. The Times wrote, however, that it could take years for meaningful amounts of oil to be accrewed under the agreement.

The SPR sits at its lowest level since 1982, holding just 289.7 million barrels, Reuters reported .