Oil jumped Monday after the US and Iran exchanged strikes near the Strait of Hormuz for the first time in about a month, reviving fears over the world's most important energy chokepoint. WTI settled at $85.76 a barrel and Brent at $90.49, even as producers keep pushing more crude oil through the strait via ship-to-ship transfers.
Fresh US-Iran fighting jolts crude
American forces hit an island in the Strait of Hormuz, and Iran responded with attacks on the United Arab Emirates and Jordan, according to Rigzone. WTI futures rose 2.8% to settle near $85.76 a barrel, the biggest gain in three weeks, while Brent futures for November delivery settled 1.3% higher at $90.49.
US Central Command said it fired on Islamic Revolutionary Guard Corps forces after spotting them preparing to deploy mines into Hormuz. Iranian media said separately that an unidentified supertanker was hit by two mines while transiting the waterway, though US Central Command said no ships had been hit. Crude is wrapping up a volatile month, with WTI swinging in a range of almost $15 a barrel and prices up about 50% this year.
Traders still watch the barrels
Despite the geopolitical risk, flows through Hormuz have held up. About 6 million to 8 million barrels a day of crude, mostly from other Gulf producers, are still moving through the chokepoint, traders monitoring cargoes told Rigzone. According to Rigzone: "the buying appetite in the market remains muted for fear of being caught out", said Ole Hansen, head of commodity strategy at Saxo Bank.
Middle East oil producers are also finding new ways to keep barrels moving, MarketWatch reported. State-controlled tankers now shuttle crude through the riskiest stretch of the strait into the Gulf of Oman, where buyers' ships pick up the cargo through ship-to-ship transfers and pay a premium for it. Kpler's unconfirmed estimates put Persian Gulf flows as high as 15 million barrels a day in mid-August, while Goldman Sachs pegged the figure slightly higher, at 15 million to 16 million barrels a day.
Refining bottlenecks and Venezuela in focus
That is still about 7 million to 8 million barrels a day below pre-war levels, but 5 million to 6 million barrels a day above a March trough, Goldman Sachs said. The bank added that ship-to-ship transfers and continued dark transits show shippers are pricing in disruptions likely continuing well into 2027.
Strikes on refineries in the Middle East and Russia have further squeezed already-stretched global refining capacity, Goldman Sachs analysts said, and the bank more than doubled its estimates for US and European diesel margins over Brent to $63 and $49 a barrel in 2027. Traders are also weighing a fresh deal giving the US majority control over a large amount of Venezuela's oil wealth, with 100-year concessions covering about 65 billion barrels of proven reserves, Bloomberg previously reported.
Sources: Rigzone, MarketWatch
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