Iron-ore futures traded at month-high prices on Monday, with Dalian iron ore rallying for the sixth consecutive session on the back of surging energy prices and freight costs amid the Iran war.

The most-traded May iron ore contract on China's Dalian Commodity Exchange (DCE) DCIOcv1 traded 3% higher at 790 yuan ($114.19) a metric ton, as of 02:47 GMT.

The benchmark April iron ore SZZFJ6on the Singapore Exchange was 2.13% higher at $103.75 a ton.

Oil prices surged about 20% on Monday as the expanding US-Israeli war with Iran led some major Middle Eastern oil producers to cut supplies. Fears of prolonged disruption to shipping through the Strait of Hormuz chokepoint also contributed to the price action.

Surging energy costs will push up costs related to bunker fuel, insurance, and war risk premium, said managing director at Navigate Commodities Atilla Widnell.

In the medium-to-long term, however, the risk of central banks raising interest rates again to curb inflation risks becomes more likely, dampening the outlook for iron ore and steel, he added.

The Strait of Hormuz is also a major route for China's steel exports to the Gulf, which has become its second largest market, taking some 16% of exports last year as other countries put up trade barriers.

Iran is the world's tenth biggest producer of steel. A blockage of the waterway would also mean that Iran would be unable to sustain its production, as it imports coking coal and exports its steel products, a note from Chinese broker Everbright Futures said.

Iron ore inventory at major Chinese ports rose by 0.67% for the week ended March 6, data from consultancy Steelhome showed.

Spot prices of seaborne iron ore were 1.51% higher at $100.6 a ton as of March 6, Steelhome data also showed.

Other steelmaking ingredients on the DCE surged, with coking coal DJMcv1 and coke DCJcv1up 7.99% and 7.19%, respectively.

Steel benchmarks on the Shanghai Futures Exchange mostly advanced. Rebar SRBcv1 gained 1.88%, hot-rolled coil SHHCcv1 rose 1.99%, and stainless steel SHSScv1 grew 1.92%. Meanwhile, wire rod SWRcv1 drifted 0.11% lower.