Strait of Hormuz Conflict Pushes Crude Prices Higher
Global oil prices climbed nearly 3 percent on Tuesday, reaching their highest level in four weeks as escalating tensions between the United States and Iran increased concerns over global energy supplies.
Brent crude rose to $84.80 per barrel, while US West Texas Intermediate (WTI) increased to $79.84 per barrel during early trading.
Earlier in the session, both benchmark contracts gained more than $2 per barrel before trimming some of those advances. Brent had already recorded its biggest daily increase since May 2020 in the previous trading session.
The latest gains pushed oil prices to their highest level since the United States and Iran signed a memorandum of understanding on June 17 aimed at reducing regional tensions.
Military Escalation Increases Market Uncertainty
Investor concerns intensified after the United States carried out a third consecutive night of military strikes against Iran.
At the same time, President Donald Trump reinstated a naval blockade targeting Iranian shipping and proposed a 20 percent fee for vessels passing through the Strait of Hormuz.
These developments have increased uncertainty over crude oil exports from one of the world’s most important energy corridors.
Tim Waterer, Chief Market Analyst at KCM Trade, said, “The latest escalation, including the US reinstatement of the blockade and Iranian responses, has clearly injected fresh risk into the market.”
He added, “While a full closure hasn’t occurred, the competing objectives of both sides have made the supply picture highly uncertain.”
Tanker Traffic Declines After Regional Attacks
Security concerns have also affected commercial shipping in the Strait of Hormuz.
The UAE Ministry of Defence reported that Iranian cruise missiles struck two UAE tankers in Omani territorial waters. The attack killed one Indian crew member and injured eight others.
Meanwhile, shipping data showed that tanker traffic through the Strait of Hormuz dropped to its lowest level in two months, reflecting growing caution among shipping operators.
Priyanka Sachdeva, an analyst at Phillip Nova, said, “The key variable to monitor is the physical movement of crude through the Strait of Hormuz.”
She added, “Any meaningful blockage of tanker traffic, prolonged reduction in vessel movements, or disruption to export flows would likely trigger another leg higher in oil prices.”
However, she noted that if oil shipments continue despite military tensions, some of the current geopolitical risk premium could gradually decline.
Additional Risks Emerge Across the Region
Regional tensions expanded further after Yemen’s Houthi movement launched missiles toward Saudi Arabia. The group accused the kingdom of attacking an airport under its control.
Simon Wong, a portfolio manager at Gabelli Funds, warned that further attacks could create additional uncertainty for regional energy supplies.
He said, “If the Houthis extend their attacks to Saudi’s crude products in the Red Sea, it could put (further) uncertainties on crude flows from the region.”
Markets Await US Inventory Data
Traders are also monitoring upcoming US inventory figures for further market direction.
Preliminary market estimates suggest that US crude oil stockpiles likely declined during the previous week. Meanwhile, analysts expect gasoline and distillate inventories to have increased.
With military tensions continuing around the Strait of Hormuz, energy markets remain highly sensitive to developments that could affect global oil production, transportation, and supply.
