Oil prices rose after fresh attacks on vessels in the Strait of Hormuz underscored persistent risks to maritime traffic in the crucial waterway. Brent crude approached $73 a barrel, while West Texas Intermediate climbed above $69. A natural gas carrier, the Al Rekayyat, was reportedly hit about eight nautical miles east of Limah, Oman, causing a fire. Separately, Axios reported that Iran fired at least two missiles at commercial ships, causing damage but no casualties.
These incidents occurred despite a recent interim peace deal between Washington and Tehran, which had eased supply disruption concerns and caused oil prices to drop 30% in the second quarter. The attacks highlight the fragility of the Middle East de-escalation trade, with Saxo Markets' Charu Chanana noting that the market might be adding back some "Hormuz risk premium" but isn't pricing in a full disruption. ING Groep's Warren Patterson suggested that any oil price bounce from a contained US response would likely be short-lived due to bearish sentiment and physical market weakness.
The broader market outlook remains less supportive, with OPEC+ continuing to increase output and Gulf supplies recovering. Saudi Aramco announced a significant price cut for its Arab Light crude to Asia for the next month, lowering it by $11 a barrel to $1.50 below a benchmark. This substantial reduction, last seen during price wars in 2015 and 2020, follows a decision by OPEC+ members to raise output quotas for the coming month, indicating a desire to normalize production levels.
Simultaneously, the US announced it was revoking waivers that allowed some countries to purchase Iranian oil, citing the recent attacks as a breach of trust. This move is expected to tighten the market further for Iranian crude, as sellers are already finding it challenging to attract buyers due to cheaper alternative grades following the ceasefire. Indian state refiners, for instance, are exploring Iranian crude only if significant discounts are offered and US waivers are extended beyond August, as Russian oil currently provides steeper discounts. The Strait of Hormuz, which carries approximately 20 million barrels of crude oil daily, remains a critical and volatile choke point for global energy supplies.
