Oil prices surged and maritime traffic slowed significantly following new attacks between the United States and Iran, intensifying their dispute over the Strait of Hormuz. Brent crude, the international benchmark, rose more than 4% on Monday to $79.26 a barrel, the highest since June 22. This brings oil prices to about 9% higher than before the initial US and Israel strikes on Iran in February. This re-escalation follows a period where prices had returned to pre-conflict levels after a short-lived memorandum of understanding was signed on June 17.
US Central Command (CENTCOM) conducted dozens of strikes on Sunday and Monday against Iranian targets, including air defense systems, radar sites, missile and drone equipment, and small boats, citing Iran's attacks on vessels. Specifically, the US accused Iran of attacking the Cyprus-flagged container ship, MV GFS Galaxy, in the strait. Iran retaliated with its own missile and drone attacks against the United Arab Emirates, Qatar, Kuwait, Oman, and Bahrain, asserting its right to control the Strait of Hormuz and threatening to close it for unauthorized passage.
Shipping through the Strait of Hormuz, a critical conduit for a fifth of global oil trade, has been severely impacted. Maritime intelligence platform Windward reported only six vessels transiting the strait between Thursday and Friday morning, compared to 18-22 daily crossings earlier in the month, and a pre-war average of 130 vessels daily. Officials like Fabien Yip from IG in Sydney believe that while risk premiums will support prices, a return to the much higher levels seen earlier in the war is unlikely, given slow demand recovery and increased global oil supply from other sources. Mukesh Sahdev of XAnalysts anticipates Brent prices to remain in the upper $70s during August and September due to geopolitical uncertainty.
Despite the renewed conflict, the US military maintains that the Strait of Hormuz remains open. However, Iran's Persian Gulf Strait Authority reiterated its claim to control the waterway and warned that vessels not using its preferred route would not be guaranteed safe passage. The UN Secretary-General António Guterres expressed concern, stating that a return to full-scale hostilities would have catastrophic consequences, as mediators continue to push for a permanent resolution to the conflict.
