Key Highlights
- Brent crude reached $90.75 per barrel—a five-week peak—before retreating to approximately $88-$89 on Monday
- U.S. military operations against Iran entered their ninth consecutive day
- Daily vessel traffic through the Strait of Hormuz plummeted to single digits, with only four ships making the passage on Sunday
- Two commercial oil tankers were reportedly struck and disabled while attempting the strait crossing
- ANZ market analysts indicated the expected shipping rebound has “effectively stalled”
Crude oil markets experienced a significant rally on Monday, reaching their highest levels in more than five weeks as intensifying military confrontations between the United States and Iran severely restricted petroleum shipments through the strategically vital Strait of Hormuz.
Brent crude futures touched $90.75 per barrel during intraday trading—marking a five-week high—before moderating to approximately $88.26 following comments from an Iranian foreign ministry official suggesting Tehran might pursue diplomatic negotiations with Washington based on national interests.
Meanwhile, West Texas Intermediate crude also retreated, declining 0.4% to settle at $82.18 per barrel after trading above the $83 threshold earlier in the session.
Hormuz Strait Vessel Traffic Collapses to Minimal Levels
The decline in petroleum shipments navigating through the critical waterway has been dramatic. Only four commercial vessels successfully completed the transit on Sunday, down from eight ships the previous day, based on data compiled by LSEG.
Market analysts at ANZ noted that passage volumes have declined to single-digit levels, stating that “the anticipated recovery in shipping has effectively stalled.”
Prior to the outbreak of hostilities in late February, approximately 20% of worldwide petroleum supplies transited through this strategic chokepoint.
Iran’s Islamic Revolutionary Guard Corps reported that two commercial oil tankers sustained damage and were rendered immobile following explosions during their attempted passage through the strait. Iranian officials claimed the vessels had been advised by U.S. military personnel to utilize what Tehran characterized as a hazardous southern navigation route.
Reuters indicated it was unable to immediately confirm these assertions.
American military forces have conducted continuous operations against Iranian targets for nine straight days. Iranian military units have retaliated with strikes targeting U.S. aircraft stationed at a Jordanian airport, as well as American military installations in Kuwait and Syria.
Bahrain authorities also confirmed warning sirens were activated Monday morning.
Global Crude Markets Tighten as Stockpiles Continue Declining
Giovanni Staunovo, an analyst with UBS, observed that the oil market is “again tightening,” with persistent attacks on vessels attempting the strait crossing contributing to a reduction in tanker traffic departing the Gulf region.
ANZ market analysts highlighted that despite increases in American production, these gains have not substantially altered the overall market equilibrium. Worldwide petroleum inventories continue their downward trajectory, maintaining tight conditions across both crude and refined products markets.
Brent crude recorded its most substantial weekly advance since April last week, surging 15.9%. West Texas Intermediate climbed 15.5% during the identical timeframe, representing its largest weekly appreciation since early March.
Earlier during the conflict, Brent crude had escalated beyond $110 per barrel before retreating to approximately $70 following the implementation of a ceasefire agreement in June. That diplomatic truce has subsequently unraveled.
Persian Gulf nations did increase crude oil and condensate shipments in early July to their most robust levels since before hostilities commenced. Nevertheless, transit volumes through the Strait of Hormuz are once again diminishing as military operations intensify.
Iranian officials have also reportedly pressured Houthi forces to shut down the Red Sea shipping route should the United States target Iranian energy infrastructure, escalating concerns about potential additional supply chain interruptions.
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