Oil prices moved modestly higher on Tuesday after renewed security incidents in the Strait of Hormuz revived concerns over potential disruptions to global energy shipments, offsetting expectations of stronger supply from OPEC+ producers.
By 04:41 ET (08:41 GMT), Brent crude futures had risen 1.1% to US$72.77 a barrel, while US West Texas Intermediate crude futures gained 1.1% to US$69.30 a barrel.
Fresh attacks reignite shipping concerns
According to Axios, citing two US officials, Iran’s military launched at least two missiles at commercial vessels transiting the Strait of Hormuz on Monday night, ending a week-long pause in attacks under an informal understanding between Washington and Tehran.
The report added that the United States is expected to respond with strikes against Iranian targets.
Earlier on Tuesday, the UK Maritime Trade Operations agency confirmed it had received a report that a tanker travelling near the coast of Oman had been struck by an unidentified projectile, causing a fire onboard. Although Iran has not officially claimed responsibility, anonymous sources cited by Iranian state television suggested the target was a tanker carrying liquefied natural gas from Qatar.
Tehran has stated that vessels using the Strait of Hormuz must follow routes approved by Iran and warned that any US interference would be met with “a rapid and decisive action.”
Axios reported that the latest incidents followed the expiration of a one-week agreement between the United States and Iran to suspend attacks in the strategically important waterway, placing a recently signed memorandum of understanding under renewed pressure.
Shipping recovery remains uncertain
Oil prices have retreated significantly since the temporary peace agreement reached in June. Following the outbreak of hostilities in late February, crude prices climbed above US$110 per barrel, fuelling fears of a renewed surge in global inflation.
While recent data indicates shipping traffic through the Strait of Hormuz has started to recover, activity remains below normal levels. Control of the waterway continues to be a central issue in negotiations, alongside Iran’s nuclear programme and the conflict involving Israel and Hezbollah in Lebanon.
Iran continues to insist on retaining a degree of authority over navigation through the strait, a position the United States has rejected.
“Oil prices are back to pre-conflict levels, even though the Strait of Hormuz is still only seeing a fraction of traffic go through. There is still supply-chain stress here,” analysts at Deutsche Bank, led by Henry Allen, said in a research note.
Rising production limits gains
Despite geopolitical support, expectations of higher global oil supply limited further gains.
OPEC+ members, including Russia, agreed on Sunday to increase production targets by 188,000 barrels per day from August, following similar output increases in June and July.
Meanwhile, the United Arab Emirates, which abandoned its OPEC+ production quota in May, said crude production exceeded 3.8 million barrels per day in June, surpassing levels seen before the conflict with Iran.
Saudi Aramco also reduced the official selling price of its flagship Arab Light crude for Asian customers for August, offering the grade at a discount to the regional benchmark for the first time since 2020. The move reflects growing competition among Gulf producers as export volumes recover.