Oil prices opened 3% higher on Monday after a weekend of tit-for-tat attacks between the US and Iran.

Brent crude futures were up $2.67 (3.51%) to $78.68, while U.S. West Texas Intermediate crude was up $2.48 (​3.47%) to $73.89 a barrel.

Traffic through the vital Strait of Hormuz, which under normal conditions handles 20% of global oil and natural gas shipments, fell to a five-week low as the ceasefire between the US and Iran broke down last week.

Iran repeatedly attacked shipping in the Strait, leading President Trump to declare the ceasefire was over.

Over the weekend, the US attacked targets in Iran. In response, Iran fired missiles at US bases in the region, including in Bahrain and Kuwait. Iran also declared the Strait of Hormuz closed, which President Trump denied.

BREAKING: The Aghajari Oil and Gas Airport in Omidiyeh, Iran, has been hit by US airstrikes.

Almost all cities in Khuzestan Province have been struck in the past three hours. pic.twitter.com/Psz1mUiOLW

— The Hormuz Letter (@HormuzLetter) July 13, 2026

The future of the Memorandum of Understanding between the US and Iran now looks uncertain. The Memorandum, signed last month, aimed to reopen the Strait of Hormuz and bring the war to a permanent end after 60 days of negotiations.

🇺🇸🇮🇷 Reporter: “Iran has declared the Strait of Hormuz is closed. Is that true?”

Trump: “As far as we are concerned, it’s open. Don’t talk about it.” pic.twitter.com/iNhVuO4lFt

— Megatron (@Megatron_ron) July 12, 2026

The global oil supply increased by 4.1 million barrels a day as a result of the signing, but was still 9.4 million barrels a day below pre-war levels.

Analysts believe expansion of Middle Eastern pipeline capacity could shield a majority of Gulf oil exports from future disruptions in the Strait of Hormuz.

Reuters reports, “Goldman Sachs estimated that ⁠expanding pipeline capacity in the Middle East could shield more than 60% of pre-war Gulf oil exports from any future Hormuz disruptions by end-2028.

“The bank’s base-case forecast ​assumes pipeline capacity bypassing Hormuz will rise by 3.8 million bpd by end-2027 and ​7.3 million bpd ⁠cumulatively by end-2028, taking total effective bypass capacity to more than 14 million bpd by end-2028.”