Key facts
- Brent crude futures for October delivery were trading at $89.53 as of 08:00 GMT.
- Maritime traffic through the Strait of Hormuz has fallen to about 10 vessels daily from roughly 130 before the war.
- US Energy Secretary Chris Wright claimed the seven-day average for oil leaving the strait had recovered to about 9 million barrels per day.
- Commodity Context estimated the moving average last week peaked at about 7 million bpd.
- The US Energy Information Administration expects Middle East oil production to return to pre-conflict levels by early 2027.
Oil prices climbed on Thursday as attacks on shipping in the Middle East heightened concerns about supply disruptions and cast doubt on the reopening of the Strait of Hormuz. Brent crude futures for October delivery were trading at $89.53 as of 08:00 GMT, marking a 24 percent increase from pre-conflict levels.
Market analysts expressed diminishing confidence in a swift resolution to the conflict. Tim Waterer, chief market analyst at KCM Trade, noted that the longer negotiations persist without visible progress, the greater the skepticism about a quick agreement. This cautious stance is replacing earlier optimism, leading to a more risk-premium-driven market.
Renewed violence has intensified concerns. Yemen’s internationally recognized government accused Iran-aligned Houthis of killing six people in missile attacks on a commercial vessel in the Bab al-Mandeb strait. Separately, US Central Command stated it attacked and disabled a Panama-flagged cargo vessel attempting to breach a US blockade of Iranian ports.
Maritime traffic through the critical Strait of Hormuz, which previously carried about one-fifth of global oil supplies, has significantly decreased. On Monday, only 10 vessels crossed the waterway, a stark contrast to the roughly 130 daily transits before the conflict. Shipping firms had transported approximately 20 million barrels of oil and petroleum products daily through the strait before its effective closure.
Conflicting figures on the recovery of oil flows have emerged. US Energy Secretary Chris Wright claimed that the seven-day average for oil leaving the strait had recovered to about 9 million barrels per day, attributing this to coordinated efforts by the US military and Gulf allies. However, market analysts, including those at Commodity Context, offered more conservative estimates, with Commodity Context placing the moving average peak last week at around 7 million bpd.
The US Energy Information Administration forecasts that Middle East oil production will not return to near pre-conflict levels until early 2027, with an average Brent price of $87 a barrel projected for the year.