Oil Prices Rise Slightly, Ship Attacks Re-Spot Hormuz Risks
Oil prices rose slightly in trading on Tuesday (July 7th), following attacks on ships around the Strait of Hormuz. This incident has again highlighted security risks in the vital shipping lane, which serves as a key link between Persian Gulf oil producers and global markets.
Brent crude oil is trading near US$73 per barrel. The rise occurred after the liquefied natural gas carrier, Al Rekayyat, was hit by a projectile near the coast of Oman while exiting the waterway. A Saudi oil tanker was also reportedly damaged.
The world's largest shipping trade group said ship traffic through the Strait of Hormuz could potentially decrease following the latest incident. However, some shipowners are still willing to take the risk of transiting the waterway. On Tuesday, several ships, including oil tankers, were seen navigating the route along the coast of Oman.
The Strait of Hormuz was previously almost completely closed due to the US-Iran war, before gradually reopening. However, although traffic has begun to recover, ship movements remain below pre-conflict levels.
Oil prices fell by around 30% in the second quarter after Washington and Tehran agreed to an interim peace agreement. This agreement eased concerns about supply disruptions from the Middle East. In fact, the war risk premium on Brent has been eliminated, while several major banks, such as Goldman Sachs and Morgan Stanley, have begun warning of a potential return to oversupply.
Recent attacks on ships in the Persian Gulf indicate that the normalization process is far from complete. ING believes a limited response from the US could provide short-term support for oil prices. However, as market sentiment remains bearish and the physical market is weak, the potential for oil price increases is likely to remain limited. (yds)*
Source: Newsmaker.id
