Key facts
- Oil prices rose amid caution over Iran-Oman talks and renewed supply tensions.
- Reports of attacks on Saudi tankers in the Red Sea and Gulf of Aden contributed to market concerns.
- The Ukrainian military conducted strikes on two oil refineries within Russia.
- Iran and Oman have advanced discussions on a shipping route through the Strait of Hormuz.
- Saudi Arabia lowered its official selling price for September Arab Light crude to Asia.
Oil prices saw an increase as investors expressed caution regarding the progress of talks between Iran and Oman, particularly concerning the Strait of Hormuz. Reports of attacks on Saudi tankers in the Red Sea and Gulf of Aden, alongside Ukrainian military strikes on two Russian oil refineries, heightened concerns about supply disruptions.
Brent crude futures rose by 0.60% to $79.93 a barrel, while U.S. West Texas Intermediate futures climbed 0.39% to $75.51 a barrel. Analysts noted lingering anxiety from previous fragile agreements, suggesting that any new deal might also prove unstable.
Iran and Oman have reportedly reached an understanding on the geographic coordinates for a shipping route through the Strait of Hormuz, with a joint announcement pending, provided external interference does not occur. A senior Iranian source and two regional officials indicated that a potential deal could grant Tehran control over ships entering the Gulf via the Strait, a significant concession.
The Strait of Hormuz, a critical global chokepoint, previously handled approximately one-fifth of the world's daily oil and liquefied natural gas supplies. Despite the ongoing diplomatic efforts, geopolitical risks persist, and the market continues to price in supply risks until verifiable increases in volumes are observed.
Gulf countries' crude oil and condensate exports remained largely steady in July, approximately 40% below pre-war levels. Iran has warned Gulf states that any new U.S. attack could trigger retaliation against regional energy infrastructure. Yemen's Iran-aligned Houthis claimed responsibility for missile attacks on two Saudi oil tankers, though Saudi Arabia has not confirmed these incidents.
In other developments, Saudi Arabia reduced its official selling price for September Arab Light crude to Asia to $2 a barrel below the Oman/Dubai average. Concurrently, Ukraine's President Volodymyr Zelenskiy announced that the Ukrainian military had successfully struck two oil refineries deep inside Russia.