Crude oil prices extended their gains for the fourth day today as fresh tanker-tracking data suggests traffic via the Strait of Hormuz has slowed further amid harder rhetoric from both Iran and the United States, with both sides demonstrating an unwillingness to return to the negotiating table.
At the time of writing, Brent crude was trading at $91.53 per barrel, and West Texas Intermediate was changing hands for $85.47 per barrel, two days after the expiration of the June ceasefire deal the U.S. and Iran had agreed, which broke down in early July.
President Trump has declared the Strait of Hormuz open, but Iran says it is still shut down and reports about tankers U-turning away from the chokepoint in recent days suggest the latter is true. The latest report of a strike on a vessel in Hormuz came on Tuesday, regarding a cargo ship that was reportedly struck by “an unknown projectile while conducting an outbound transit of the Strait of Hormuz,” as reported by the United Kingdom Maritime Trade Operations.
“The shipping risks are increasing again as attacks from Iran and Houthis remain prevalent in both key chokepoints, keeping oil prices supported in the near term,” Sparta Commodities senior oil analyst June Goh said, as quoted by Reuters. She added, however, that “Gulf producers are finding alternative export routes to bring oil out to the Gulf of Oman. If sustainable, this could help increase shut-in production from these two producers.”
Regarding these alternative routes for oil exports, ING’s commodity team wrote in a Tuesday update that “Saudi Arabia is reportedly offering crude cargoes from locations off the coast of Oman, signalling efforts to expand export routes outside the Persian Gulf. Saudi Aramco is marketing Arab Medium and Arab Heavy grades via ship-to-ship transfers from terminals including Sohar.”
By Irina Slav for Oilprice.com
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