Oil Climbs as Middle East Shipping Risks Return to Focus
Oil prices moved higher after attacks on vessels in the Strait of Hormuz renewed concerns over potential disruptions to global energy traffic. The waterway remains a key focus for markets as it serves as one of the most important routes for oil and gas shipments from the Persian Gulf to global markets.
Brent crude rose toward US$73 per barrel, while West Texas Intermediate, or WTI, traded above US$69 per barrel. The increase came after a tanker traveling south was reportedly struck around 8 nautical miles east of Limah, Oman, triggering a fire. The vessel was identified as Al Rekayyat, a natural gas carrier.
Separately, Iran was also reported to have fired at least two missiles at commercial ships transiting through the Strait of Hormuz. Two vessels were said to have suffered damage, although no casualties were reported. The incident prompted investors to reassess geopolitical risks in the Middle East.
The Strait of Hormuz had previously been almost completely closed due to the conflict between the United States and Iran. It has since started to reopen gradually, including for a convoy of Japan-linked vessels. However, shipping traffic has not fully returned to pre-conflict levels.
According to Ellen Wald, president of Transversal Consulting and author of Saudi, Inc., Saudi Aramco is lowering oil prices to make it worthwhile for Asian buyers to charter tankers into the Strait of Hormuz. The move shows that shipping risks remain a key consideration for energy buyers in Asia.
Oil prices had earlier fallen by around 30 percent in the second quarter after Washington and Tehran reached an interim peace deal. The agreement helped ease concerns over supply disruptions from the Middle East. The war premium in Brent crude has also been fully erased, while major banks including Goldman Sachs and Morgan Stanley have warned that the risk of oversupply could return.
However, the latest vessel attacks in the Persian Gulf show that energy market normalization is still far from complete. Warren Patterson, head of commodities strategy at ING Groep NV in Singapore, said a contained response from the United States could offer short-term support for oil prices. Even so, bearish sentiment and weakness in the physical market could limit the durability of any rebound.
On Monday, Saudi Aramco said it would lower the price of Arab Light crude for Asian buyers next month by US$11 per barrel, bringing it to US$1.50 below the benchmark. The last two times Saudi Arabia sold the grade at a discount were during the oil price wars in 2020 and 2015.
Riyadh’s move followed a weekend decision by OPEC+ members, including Saudi Arabia, to raise output quotas for next month. The decision added to expectations of higher global supply as market conditions begin to normalize. While the additional barrels remain theoretical, the move signals a desire among producers to gradually increase production.
In Tuesday morning trade in Singapore, Brent crude for September delivery rose 1 percent to US$72.69 per barrel. Meanwhile, WTI crude for August delivery also gained 1 percent to US$69.26 per barrel.
Charu Chanana, chief investment strategist at Saxo Markets, said the latest vessel attacks remind investors that the Middle East de-escalation trade remains fragile. According to her, the market may add back some of the Hormuz risk premium, although prices do not yet appear to reflect a full disruption scenario.
Even so, the broader backdrop remains less supportive for a sustained oil rally. OPEC+ continues to raise output, Gulf supplies are recovering, and the Brent-Dubai market structure has shifted into contango. This bearish pricing pattern usually signals a looser near-term physical market.
Market participants are now waiting for the US Energy Information Administration’s Short-Term Energy Outlook for further insight into supply and demand conditions. In its previous report, the agency raised its 2027 forecast for US crude production by 220,000 barrels per day to 13.83 million barrels per day, after prices had rallied during the war.
Source : Newsmaker.id
