Oil prices saw an uptick following reports of a tanker being hit by a projectile near the Strait of Hormuz. Brent crude futures gained 0.85% to $72.60 a barrel, while U.S. West Texas Intermediate (WTI) rose 0.71% to $69.04 a barrel. This increase reverses a recent downward trend, pushing prices above an earlier decline exacerbated by an interim peace deal between the US and Iran and an anticipated oversupply.
The attack occurred on the Al Rekayyat, a Qatari natural gas carrier, approximately eight nautical miles east of Limah, Oman. This incident, which reportedly involved Iranian missiles targeting commercial ships, signals the fragility of the recent de-escalation efforts in the Middle East. Analysts at Saxo Bank noted that while a geopolitical risk premium is being added back into prices, it's not a full disruption yet, suggesting any bounce might be short-lived given bearish sentiment.
Despite the immediate price hike, the overall market outlook remains less supportive. OPEC+ has agreed to raise output quotas by 188,000 barrels per day from August, and Saudi Aramco cut its Arab Light crude price for Asia by $11 a barrel for next month, marking the first discount since 2020. This indicates intensifying competition and a loosening physical market. The Brent-Dubai market structure has even shifted into contango, a bearish pricing pattern.
While the attacks highlight ongoing risks to shipping, they also test a recent memorandum of understanding between Washington and Tehran designed to suspend such actions. Deutsche Bank analysts noted that oil prices are back to pre-conflict levels, despite the Strait of Hormuz still experiencing only a fraction of its normal traffic, indicating persistent supply chain stress.
