Brent Approaches $80 As Middle East Tensions Rekindle Hormuz Shipping Risks And Oil Rally
Brent crude rises as Hormuz supply risks intensify.
Oil prices extended their strong rally on Thursday as renewed US military strikes on Iran heightened fears of supply disruptions in the Middle East, pushing Brent crude closer to the $80-per-barrel mark. The escalation in tensions has reignited concerns over the security of the Strait of Hormuz, one of the world's most critical energy shipping routes, prompting traders to factor in a higher geopolitical risk premium. Brent crude rose as much as 1.4% to trade above $79 a barrel, after surging more than 5% in the previous session. US benchmark West Texas Intermediate (WTI) climbed to around $74 per barrel, taking its cumulative gains over the past two trading sessions to more than 6%.
The latest jump followed reports that US forces carried out a second consecutive round of strikes targeting Iranian military assets, aiming to weaken Tehran's ability to threaten commercial shipping through the Strait of Hormuz. The military action has further intensified an already volatile regional conflict. Iran responded by announcing plans for a large-scale retaliatory operation targeting US military bases in the region, raising concerns that the confrontation could spread further across West Asia. Investors fear that any prolonged conflict involving major oil-producing nations could disrupt production and transportation, tightening global supplies at a time when demand remains relatively resilient.
The Strait of Hormuz has once again emerged as the focal point of the oil market. The narrow waterway serves as the primary export route for crude produced by several Gulf nations, carrying roughly a fifth of the world's seaborne oil trade. Earlier in the conflict, which began in February, the near-complete closure of the strait forced several regional producers to scale back oil production as storage facilities reached capacity. Although shipping activity gradually resumed after an interim peace agreement between the United States and Iran, the renewed hostilities have raised fresh concerns that shipping companies could once again avoid the route due to security risks.
Also Read: Oil Prices Rally As US Attacks Iran Following Ship Assaults, Brent Climbs Above $76
US President Donald Trump added to market uncertainty on Wednesday by declaring that the interim peace agreement with Iran was over and suggesting that Washington could reimpose a blockade on Iranian ports. He also warned that oil prices could rise further if tensions continue to escalate and indicated that future military action could include targeting Iran's Kharg Island, the country's principal crude oil export terminal. Any disruption at Kharg Island could significantly affect Iranian oil exports and further tighten global supplies.
Supply concerns have also been reinforced by the latest inventory data from the United States. While commercial crude stockpiles increased by nearly 3 million barrels last week, a drawdown of approximately 6.2 million barrels from the US Strategic Petroleum Reserve resulted in an overall decline of more than 3 million barrels in total oil inventories. Distillate fuel inventories, including diesel, fell by around 5 million barrels, while gasoline stockpiles dropped to their lowest seasonal level since 2012, signalling robust fuel demand during the peak summer driving season.
Adding to the uncertainty, the US Treasury has revoked a sanctions waiver that had previously allowed Iran to continue limited oil sales under the interim agreement. As a result, millions of barrels of Iranian crude that had entered international markets following the temporary easing of sanctions now face an uncertain future. The move is expected to further restrict global oil supplies and could place additional upward pressure on prices if the geopolitical situation continues to deteriorate.
Analysts say energy markets are likely to remain highly sensitive to developments in the Middle East over the coming days. Traders will closely monitor military activity around the Strait of Hormuz, diplomatic efforts to contain the conflict and any signs of disruption to oil exports. With Brent crude approaching $80 a barrel and geopolitical risks mounting, volatility is expected to remain elevated, keeping global energy markets on edge.
Also Read: Oil Prices Fall After OPEC+ Raises August Supply, Brent Drops Below $72 Per Barrel
