Oil prices surge higher as US and Iran exchange fire for first time in a month

News of the first direct exchange of fire between the US and Iranian militaries in roughly a month sent oil prices surging upward on Monday, with Brent futures rising above $90 per barrel as investors priced in renewed escalation.

Futures on Brent crude , the international benchmark, pushed to an intraday high above $91 per barrel, gaining over 2% to cross $90 for the first time in roughly a week. Meanwhile, those on US benchmark WTI crude  gained roughly 4% to trade above $86.

Futures surged at the start of trading Sunday evening on news that the US military had launched a series of air strikes on Iran's Larak Island, a small landmass inside the Strait of Hormuz, where US Central Command alleges the Iranian military was readying rockets that would carry sea mines into the waterway.

Given Larak Island's location in the strait, it has become a crucial monitoring and traffic control point for Iran's Revolutionary Guard Corps.

"Earlier today U.S. forces struck two Iranian launchers on Larak Island. Islamic Revolutionary Guard Corps forces were observed preparing to launch rockets with sea mines into the Strait of Hormuz," a Central Command spokesperson said in a statement.

Iran's military retaliated with a barrage of drones targeting sites within GCC nations Jordan and the United Arab Emirates and said it had seized a bulk carrier vessel near the port of Bandar Abbas inside the Strait of Hormuz. Tehran's military leadership also claimed that an oil supertanker had struck a mine while attempting to transit an unauthorized route through the strait, though US Central Command said it had successfully demined the waterway in its statement on Sunday.