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Oil prices fell back in early trade but remained elevated as investors kept an eye on escalating tensions between the US and Iran and progress on ships passing through the Strait of Hormuz.
At the time of writing, Brent crude was trading 1.38% lower at $112.86 while US crude, or WTI, was down 2.27% at $104 per barrel. US futures edged 0.1% higher.
Elsewhere, regional trading was thin overnight with markets in Japan, South Korea and mainland China closed for holidays.
Hong Kong’s Hang Seng fell 1.1% to 25,805.98. Australia’s S&P/ASX 200 lost 0.5% to 8,649.80, while Taiwan’s Taiex traded 0.2% lower at 40,626.22.
The fragile ceasefire between the US and Iran was tested on Monday after the US military said it had sank six Iranian small boats targeting civilian ships, while two US-flagged ships successfully passed through the Strait of Hormuz.
The key waterway for oil and gas transport remains largely closed despite repeated demands from the US for Iran to reopen the strait and as the United States imposed a sea blockade on Iranian ports. US President Donald Trump’s “Project Freedom” plan under which the United States would help guide stranded ships through the Strait of Hormuz began on Monday.
Brent crude, the international standard, surged above $114 a barrel on Monday, gaining nearly 6%. Before the war began in late February, it was trading near $70.