Oil Rises Amidst Rising Tensions in Hormuz and Renewed Supply Fears

SadaNews Economy - Oil rose for the fourth consecutive day as the United States conducted another round of attacks on Iran in an effort to secure shipping through the Strait of Hormuz.

Brent crude, the global benchmark, traded near $85 per barrel after rising 12% during the previous three sessions, while West Texas Intermediate was near $80. The United States completed more airstrikes on Iran, claiming it had disrupted an empty oil tanker headed to a port in the OPEC+ member Iran.

The crude jumped to its highest level in nearly a month as the escalating conflict revived fears about flows from the energy-rich region, wiping out part of a nearly 30% drop in the second quarter. At the same time, near-daily Ukrainian strikes on Russian fuel production facilities and tankers are threatening global supplies even further.

Jeff Curry, senior advisor at Carlyle Group Inc, stated in an interview with Bloomberg Television: "We haven't just lost the entire Strait of Hormuz again; we've also lost crude and refineries in Russia." He added, "I see the situation in the energy sector as extremely dire."

U.S. President Donald Trump pledged to intensify bombing Iran until Tehran stops attacking ships in the strait and agrees to open the vital energy choke point. The Wall Street Journal reported that Trump is inclined to expand military operations and discussed seizing Qeshm Island, which houses Iran's main oil export terminal.

Tehran shows little indication of backpedaling. The Revolutionary Guard stated on Wednesday that the strait would remain closed until the U.S. ends its strikes and blockade of Iranian ports.

In this context, the global economy faces a renewed challenge if the shipping issue through the strait is not resolved within weeks, according to Fatih Birol, executive director of the International Energy Agency, in an interview with Bloomberg Television.

Tehran's recent attacks on oil tankers also threaten an innovative trade that has rapidly expanded in recent months to become one of the primary means of moving crude out of Arabian Gulf waters, known as shuttle voyages.

This system, where ships transfer crude to other ships outside the strait, has become a lifeline for countries including the UAE during the war, despite the likelihood of any short-term cessation.

Analysts at RBC Capital Markets LLC, including Halima Croft, said the seven-day moving average of oil flows through the strait has fallen by 4.6 million barrels per day to 3.9 million barrels per day since fighting resumed a week ago, reflecting the collapse of the ceasefire, the resurgence of Iranian attacks, and the return of the U.S. blockade.

They noted that even if Trump opts for a strategic withdrawal, "we do not see traffic in Hormuz returning to pre-war levels as long as shipping companies have to deal with the threats of mines, missiles, drones, and potential fees that Tehran may impose."

However, tanker traffic has continued. Tim Hawkins, a spokesperson for U.S. Central Command, stated that the number of crossings assisted by the U.S. reached double digits on Tuesday night. Of approximately 300 vessels that crossed the waterway last week, nearly half received assistance from U.S. forces.

Meanwhile, U.S. crude inventories fell by about 1.7 million barrels last week as oil exports increased, although they remain below pre-war averages, according to data from the Energy Information Administration released on Wednesday.

Inventories at Cushing, Oklahoma, the delivery point for West Texas Intermediate, rose above the 20 million barrel level, regarded as the operational minimum for the center.

Prices:

Brent crude for September settlement rose 0.3% to $85.21 per barrel at 9:38 AM in Singapore.

West Texas Intermediate for August delivery rose 0.5% to $80.03 per barrel.