Oil prices surged about 6% crossing 100 after US military blockade announcement and Iran retaliation threats following failed peace talks.
Brent crude rose 5.76 dollars or 6.1 percent to 100.96, while WTI gained 5.69 dollars to 102.26 per barrel on Monday.
Physical crude prices for immediate delivery surged higher, with some European grades reaching record levels around 150 dollars a barrel.
An analyst said that if the United States backs its blockade threat with ships, paper and physical markets may converge.
Two Iran-linked tankers left the Gulf as vessels avoided Strait of Hormuz, which handles about 20 percent global flows energy.
Saudi Arabia restored capacity of East West pipeline to about seven million barrels per day but China sales may fall.
OPEC lowered its forecast for world oil demand in second quarter by 500000 barrels per day amid price volatility pressures.
European Central Bank says rate decisions depend on war driven oil price surge affecting broader inflation across Europe markets outlook.
European Union Commission urges coordination on energy prices after 22 billion euro increase in fossil fuel bills since war began.
Germany agreed fuel price relief while Bank of Japan warned uncertainty could hurt output amid Middle East conflict risks remain.