Oil prices traded close to six-week highs on Monday as further attacks involving the United States and Iran kept attention on crude shipments through the Strait of Hormuz and other Middle Eastern shipping routes.
Brent crude futures were down 9 cents, or 0.1%, at $96.19 a barrel at 0822 GMT, after reaching $97.93 earlier in the session, their highest level since July 24.
U.S. West Texas Intermediate crude was down 45 cents at $91.03 a barrel, also remaining close to a recent six-week high.
Brent gained around 8% last week, while WTI rose nearly 10% following the resumption of attacks between the U.S. and Iran.
Tanker traffic through Hormuz declines
U.S. forces struck three Iranian oil tankers on Saturday, according to U.S. Central Command, including one off Kharg Island near Iran’s main oil export hub.
The navy of Iran’s Islamic Revolutionary Guard Corps said on Saturday that it had targeted three oil tankers travelling through unauthorised routes in the Strait of Hormuz, as well as three additional U.S. vessels elsewhere.
Marisks, a maritime intelligence firm, described Saturday’s attacks as a “major escalation.”
“Commercial tankers are now being deliberately used as instruments of reciprocal economic pressure, substantially weakening the previous distinction between military confrontation and commercial shipping,” the firm added.
An average of 10 commodity vessels per day travelled through the Strait of Hormuz over the past 10 days, the lowest level since May, according to data from analytics firm Kpler released on Monday.
“If tanker traffic begins to slow materially, the market could price in a much larger supply shock. And there are already signs that this is happening,” said Priyanka Sachdeva, head of market insights at Phillip Nova.
Goldman Sachs said oil prices could rise as high as $120 a barrel if attacks on shipping increase.
Iran plans restricted zone near Hormuz
Iran plans to announce a restricted zone outside the Strait of Hormuz in the coming days, according to Mohsen Rezaei, secretary of Iran’s Supreme National Security Council, as cited by state media.
The announcement adds to market attention on shipping through the strait as traders assess the potential impact of the conflict on Middle Eastern oil supplies.
Separately, OPEC+ left its oil production policy unchanged for October following a meeting on Sunday. The producer group said it needs to agree on new quotas before determining its next production steps.