Oil prices are continuing their upward trend, with Brent crude futures climbing $0.52 (0.54%) to $96.80 a barrel and US West Texas Intermediate (WTI) crude rising $0.66 (0.72%) to $92.14 a barrel. This follows a strong previous week where Brent rose 7.8% and WTI gained nearly 10%. The increase is largely attributed to heightened tensions and tit-for-tat attacks between the US and Iran targeting vessels in the Strait of Hormuz and other areas, raising concerns about prolonged supply disruptions from the Middle East. Analysts anticipate that this prolonged stand-off and calibrated military action will likely delay the full recovery of Middle East supply, with a return to pre-war throughput not expected until late Q1 or early Q2 2027.
The conflict intensified over the weekend with US forces striking three Iranian oil tankers, including one near Iran’s key oil export hub. In response, Iran’s Islamic Revolutionary Guard Corps Navy stated they targeted three oil tankers in unauthorized routes through the Strait of Hormuz and three additional US vessels elsewhere. Mohsen Rezaei, secretary of Iran’s Supreme National Security Council, announced a restricted zone would be declared outside the Strait of Hormuz in the coming days. The maritime intelligence firm Marisks described the Saturday attacks as a “major escalation,” noting that commercial tankers are now being deliberately used as instruments of reciprocal economic pressure.
The Strait of Hormuz, critical for global oil shipments, has seen severe disruptions, with traffic plummeting to a multi-month low of only 10 commodity ships per day over the past 10 days, according to analytics firm Kpler. This contrasts with US Navy statements about increased escort operations ensuring oil flow, though the US Energy Secretary confirmed oil moving through the Strait is averaging a little over 9 million barrels per day with US Navy escorts. Despite the volatile situation, OPEC+ kept its oil output policy unchanged for October, as it needs to agree on new quotas before deciding next output steps, further contributing to market uncertainty and keeping a geopolitical premium embedded in crude prices. The premium for Brent crude over WTI, currently around $4.66 a barrel, reflects the greater exposure of international crude prices to Middle Eastern supply and shipping risks.
