Oil prices extend gains as Brent tops $90 a barrel amid U.S. Iran strikes and falling Strait of Hormuz tanker traffic.
Oil prices extend gains this week as the standoff between the United States and Iran chokes off tanker traffic through the Strait of Hormuz, sending Brent crude above 90 dollars a barrel for the first time in more than a month.
A Fast Break Higher
Brent futures climbed to 89.13 dollars a barrel, up roughly 1.2 percent on the session and building on last week's 15.9 percent surge, the biggest weekly gain since April. U.S. West Texas Intermediate followed, rising to 83.14 dollars, its best level since mid June, after a 15.5 percent weekly jump that marked its strongest run since early March. Traders reading the crude market often lean on the USO exchange traded fund as a proxy for these moves, and USO has tracked the same sharp upswing as futures prices repriced the risk of a wider Gulf conflict.
Why Tanker Traffic Through Hormuz Matters
The strait carries about 20 percent of global oil supply on a normal day. That flow has thinned dramatically. LSEG shipping data showed only four vessels transiting the strait on Sunday, down from eight a day earlier. Analysts at UBS pointed to repeated strikes on ships crossing the waterway as the reason tankers are avoiding the route altogether, while ANZ analysts described the recovery in shipping as effectively stalled, with transit volumes falling to single digits.
Iran's Revolutionary Guard said two tankers were disabled by explosions while attempting a southern route through the strait that it called unsafe, claiming the vessels had been steered there by the U.S. military. Reuters could not independently confirm the account. Separately, a vessel was reported on fire near Oman's Kumzar early Monday, another sign of how dangerous the waters have become for commercial shipping.
A Blockade Meets a Naval Response
The U.S. has now carried out nine consecutive nights of strikes against Iran, and allies Kuwait and Bahrain reported fresh Iranian strikes over the weekend. Washington says it is enforcing a naval blockade on Iranian ports, while Tehran says it is targeting vessels that violate its own rules for navigating the strait. Iran has also reportedly pressed Yemen's Houthi forces to shut down the Red Sea route if the U.S. strikes Iranian power infrastructure, a move that would squeeze an already stressed shipping map even further.
Exports Were Rising Before the Squeeze
Gulf producers had actually pushed crude and condensate exports to their highest levels since before the war began in late February, shipping data for the first half of July showed. That supply cushion is now being undercut by the slowdown in strait transits, a shift ANZ analysts called a more bearish turn for the supply outlook. At least four tankers, three carrying oil products and one very large crude carrier, entered the strait since Friday to load cargo, evidence that some shippers are still willing to take the risk.
How Long Can the Squeeze Last
The path from here depends on whether the U.S. and Iran find any offramp from nightly strikes, or whether tanker traffic keeps thinning toward zero. A broader Houthi move against the Red Sea would add another chokepoint to an already nervous market, while any ceasefire signal could unwind much of the recent price surge just as quickly as it built.
Frequently Asked Questions
Why is oil increasing?
Prices are climbing because fighting between the U.S. and Iran has cut the number of tankers willing to cross the Strait of Hormuz, a route that normally carries about a fifth of the world's oil.
Why oil price increased?
Strikes on vessels in the strait, a U.S. naval blockade on Iranian ports, and Iran's own targeting of ships have combined to shrink transit volumes to single digits, tightening supply expectations.
Will oil prices drop further?
Prices could ease if the U.S. and Iran de escalate or shipping through the strait recovers, though no such shift had appeared as of Monday's trading.
Will oil prices continue to rise?
Further gains are possible if attacks on tankers persist or if Iran pushes the Houthis to close the Red Sea route, adding another supply threat.
Will oil prices continue to go up?
That depends largely on whether Hormuz traffic keeps falling; UBS and ANZ analysts both say the market remains tight for now, which tends to keep prices supported.