Oil prices have seen significant fluctuations recently following an interim peace deal between the US and Iran and subsequent escalations. Brent crude, for instance, tumbled 4.8% to settle near $83 a barrel, and West Texas Intermediate ended the day near $81 on June 14, following news of an interim deal to reopen the Strait of Hormuz. These prices were more than 30% lower than their peak during the height of the conflict, as the reopening of the strait was expected to increase oil supply.
However, tensions reignited with a tanker being struck by a projectile in the Strait of Hormuz on June 27, and subsequent drone and missile attacks by Iran against Bahrain and Kuwait on June 28. The Panamanian-flagged tanker Kiku, carrying crude oil for Qatar's state-run energy company, was attacked on Saturday. These incidents prompted the US military to retaliate with airstrikes targeting Iranian military surveillance, communication, air defense, drone storage, and minelaying facilities.
Despite the "elevated threat environment," commercial transits assisted by the U.S. Navy have continued through the Strait of Hormuz, with 89 transits made over 72 hours, although this is below the historical average of 138 vessels per day. Iran's actions, including attacking vessels near Oman and asserting control over the strait, are seen as attempts to delay the full reopening. Kuwait and Bahrain reported intercepted drones and missiles, with Bahrain noting damage to a residential building near its international airport. The Strait of Hormuz, a critical waterway, had just begun to reopen after months of disruption, with oil prices tumbling when ships started leaving the Gulf.
The multinational maritime body overseen by the U.S. Navy is expanding a route near Oman for inbound and outbound traffic to facilitate shipping. However, the ongoing exchanges of fire between the US and Iran, each accusing the other of violating the recent interim deal, threaten negotiations. Iran has also stated it aims to charge fees for using the strait and wants ships to use a northern route through its waters, while Washington promotes a southern lane along the coast of Oman. The attacks have led Britain's UKMTO maritime security agency to raise its security threat level after a tanker sustained damage to its bridge on June 27.
