Summary
- Iran’s Guards say two oil tankers immobilised in Strait of Hormuz
- Shipping recovery has effectively stalled, analysts say
- Brent and WTI benchmarks hit more than one-month high
(Reuters) – Oil prices rose on Monday to their highest in more than a month, with Brent crude climbing above $90 a barrel as escalating hostilities between the U.S. and Iran restricted oil shipments through the Strait of Hormuz.
Brent crude futures were up $1.03, or 1.17%, at $89.13 a barrel by 0751 GMT, touching their highest since June 11 and extending last week’s hefty 15.9% gains. That was Brent’s biggest weekly gain since April.
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U.S. West Texas Intermediate crude rose 65 cents, or 0.79%, to $83.14, its loftiest level since June 12. Front-month prices had gained 15.5% last week for the largest weekly ascent since early March.
DROP IN TANKER TRAFFIC FROM GULF
“The oil market is again tightening in my view, which is likely to keep oil prices supported,” said UBS analyst Giovanni Staunovo. “Repeated strikes on vessels crossing the Strait of Hormuz have resulted in a drop in tankers exiting the Gulf.”
The Middle East conflict escalated over the weekend, with the U.S. conducting a ninth straight night of attacks against Iran while U.S. allies Kuwait and Bahrain reported more Iranian strikes.
The Islamic Revolutionary Guard Corps said on Monday that two oil tankers had been immobilised after explosions as they attempted to transit what it described as an unsafe southern route through the Strait of Hormuz, alleging they had been encouraged by the U.S. military to use that passage.
Reuters was unable to obtain immediate verification of events.
“The supply narrative has become more bearish. The anticipated recovery in shipping has effectively stalled, with Strait of Hormuz transit volumes falling to single digits,” ANZ analysts said in a note.
Four vessels made the transit through the Strait of Hormuz on Sunday, down from eight the previous day, LSEG data showed. At least three oil products tankers and one very large crude carrier have entered the strait since Friday to load oil, the data showed.
In recent days both sides have taken aim at shipping traffic, with the U.S. saying it is enforcing a naval blockade on Iranian ports, and Iran saying it targets vessels violating its rules on navigating the Strait of Hormuz.
A vessel was on fire northwest of Oman’s Kumzar, the United Kingdom Maritime Trade Operations centre said early on Monday.
Gulf countries boosted crude oil and condensate exports in the first half of July to their highest since before the Iran war began in late February, shipping data showed, though flows through the Strait of Hormuz are now slowing as fighting escalates.
The collapse of a U.S.-Iran truce has reignited concerns over energy supplies moving through the strait. Before the Iran war, about 20% of global oil supplies flowed through the waterway. Iran has also pressed the Houthis to close the Red Sea route if the U.S. attacks Iranian power infrastructure.
Reporting by Anushree Mukherjee in Bengaluru and lorence Tan and Siyi Liu in Singapore Editing by David Goodman
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