The oil market is treating another US-Iran escalation as background noise.
The U.S. launched another wave of strikes against Iran on Wednesday, expanding attacks on military targets along the country’s southern coast. Brent crude barely flinched. The global benchmark traded around $84.65 per barrel Wednesday afternoon, down slightly on the day despite another escalation in the fight over the Strait of Hormuz.
U.S. Central Command said Wednesday’s operation targeted Iranian coastal defense systems, cruise missile storage sites, launch positions, and military facilities near Bandar Abbas, Bushehr, Qeshm, Greater Tunb Island, and other locations overlooking the Gulf. The daytime strikes followed hours of overnight attacks that Washington said hit dozens of additional military targets tied to Iran’s ability to threaten commercial shipping.
Iran answered with more than missiles.
Tehran threatened to expand its campaign against global energy exports beyond the Strait of Hormuz, warning that additional shipping corridors serving the United States and its allies could become targets. Iranian officials have increasingly pointed to the Bab el-Mandeb chokepoint, where Houthi attacks previously forced commercial shipping around southern Africa and sent freight costs soaring.
Shipping companies are already adjusting. Several tanker operators have declined to participate in U.S.-guided transits through the Strait of Hormuz after recent attacks on commercial vessels, according to Reuters. The escorted convoys helped move tens of millions of barrels out of the Gulf after the June ceasefire reopened the waterway. Crew safety is again taking priority over shorter voyages.
Washington added another layer of pressure Wednesday by sanctioning seven people and entities accused of helping Iran’s Islamic Revolutionary Guard Corps procure weapons. The measures target companies and individuals in Iran, Russia, and Nigeria that U.S. officials say supported the procurement network.
Oil traders appear to be weighing two markets at once. Military activity continues to intensify. Physical oil exports have yet to suffer another collapse on the scale seen earlier this year. Until barrels begin disappearing from the market again, crude prices appear more interested in actual supply losses than another round of military headlines.
By Julianne Geiger for Oilprice.com
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