As fears grow that the U.S.-Iran military conflict could escalate into full-scale war, international oil prices have surged, with Brent crude surpassing $90 per barrel. Amid intensifying retaliatory strikes between the two nations, shipping traffic through the Strait of Hormuz, a critical route for global oil transport, has declined again, raising concerns about supply disruptions.
According to Reuters, as of 2:41 a.m. GMT on July 20, September Brent crude futures were trading at $90.19 per barrel, up 2.37% from the previous trading day. August West Texas Intermediate (WTI) futures also rose by 2.07% to $84.20 per barrel. Both Brent and WTI saw increases of 15.9% and 15.5%, respectively, just last week.
The primary driver behind the rising oil prices is the potential for renewed full-scale conflict between the U.S. and Iran. The U.S. has continued its airstrikes against Iran for the ninth consecutive day. In retaliation, Iran has targeted U.S. military bases and allied nations in the Middle East, including Jordan, Kuwait, and Bahrain. A ceasefire agreement reached last month has effectively collapsed.
U.S. retaliation has intensified following the deaths of two American service members and the disappearance of another due to Iranian attacks in Jordan. Additionally, one U.S. soldier was killed while dismantling an unexploded Iranian drone in Iraq. The U.S. military has been targeting Iranian command facilities, air defense systems, coastal surveillance sites, and missile and drone launch facilities, while also deploying additional military aircraft to the region.
Market analysts are increasingly concerned that prolonged hostilities could severely disrupt oil transport through the Strait of Hormuz, which accounts for about 20% of global oil supply.
Shipping traffic through the strait has already seen a significant decline. According to financial information firm LSEG, only four vessels passed through the Strait of Hormuz on July 19, down from eight the previous day. Recently, the passage of liquefied natural gas (LNG) carriers has also ceased, as confirmed by the Automatic Identification System (AIS).
The risks associated with shipping operations are also rising. The Iranian Revolutionary Guard Corps (IRGC) claimed that two oil tankers passing through the southern route of the Strait of Hormuz exploded and are now unable to operate. The UK Maritime Trade Operations (UKMTO) reported a fire incident involving a vessel near Oman.
Oil exports from the Gulf region have not yet returned to pre-war levels. Major oil-producing countries increased their oil and condensate exports to 12 million barrels per day in the first half of this month, but this remains 32% below the peak levels seen in February before the conflict.
Middle Eastern oil-producing nations are increasingly utilizing transport routes that bypass the Strait of Hormuz. Saudi Arabia has redirected a significant portion of its oil exports to the Red Sea port of Yanbu. However, concerns are rising that Iran could threaten this alternative route through its support of the Houthi armed group in Yemen.
Experts warn that a prolonged reduction in shipping traffic through the Strait of Hormuz could lead to actual decreases in oil supply. Johannes Laubach, an analyst at energy and shipping data firm Kpler, stated, "If traffic through the strait continues to decline, oil-producing countries may have to cut production, ultimately reducing the amount of oil available in the market."
Amarpreet Singh, an analyst at Barclays, noted, "In a situation where the U.S. is blocking Iranian ports and Iran is controlling the Strait of Hormuz, the key question is how much Gulf region oil can actually be supplied to the market." He added, "Despite oil inventories being at their tightest levels in five years, the market is overly optimistic about the risk of supply shocks."
* This article has been translated by AI.
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