Oil prices surged on Monday amid escalating tensions in the Strait of Hormuz after Iran claimed it struck a U.S. warship and forced it to turn back, a charge denied by U.S. officials. The Strait of Hormuz, a critical chokepoint for global oil shipments, has seen increasing disruptions that have kept markets on edge.

By 1124 GMT, Brent crude futures rose $3.64, or 3.4 percent, to $111.81 a barrel, reversing losses from Friday's session when prices fell $2.23. Similarly, U.S. West Texas Intermediate crude gained $3.40, or 3.3 percent, to $105.34 a barrel, following a $3.15 decline on Friday.

Iran's Fars news agency, citing unnamed local sources, reported that Iranian forces engaged a U.S. warship attempting to pass through the Strait of Hormuz and compelled it to retreat. However, the U.S. Central Command categorically denied that any U.S. Navy vessels had been hit. The conflicting accounts highlight the heightened risk of miscalculation as global oil markets react to geopolitical uncertainty in the region.

Analysts noted that oil prices are likely to remain elevated while flows through the strait continue to face restrictions. Giovanni Staunovo, an analyst at UBS, commented, "The path for prices remains skewed to the upside as long as flows through the strait remain restricted."

U.S. President Donald Trump announced plans for efforts to assist vessels stranded in the Strait of Hormuz, though no immediate resolution appears in sight. Despite U.S. pledges, crude prices firmly stayed above $100 per barrel as shipping through the strategically vital waterway remains constrained.

On the diplomatic front, Iran’s military issued a stern warning on Monday, cautioning U.S. forces against entering the strait and promising a “harsh” response to any perceived threat. Tehran has prioritized a nuclear deal but demands that discussions be postponed until after the ongoing conflict concludes and rival blockades on Gulf shipping lanes are lifted.

Adding to the tense environment, the UK Maritime Trade Operations agency reported on Monday that a tanker had been struck by unidentified projectiles while transiting near Fujairah, a port in the United Arab Emirates. These incidents further exacerbate concerns about maritime security in the Gulf region.

Meanwhile, OPEC and partner producers, collectively known as OPEC+, announced an increase in oil output targets by 188,000 barrels per day for seven member countries, effective June. This marks the third consecutive planned increase, though the share allotted to the UAE was excluded following its departure from OPEC on May 1. Industry observers caution that the additional supply is likely to be limited in effect so long as ongoing conflict disrupts exports through the Hormuz Strait.

As the standoff continues, market participants remain vigilant over developments in the region, weighing geopolitical risks alongside production decisions from oil exporters.