Oil prices rose on Monday as retaliatory attacks between the U.S. and Iran on vessels navigating the Strait of Hormuz and other areas have intensified concerns about a prolonged disruption in Middle Eastern oil supply. The price of Brent crude rose by 79 cents (equivalent to 0.82%) to $97.27 per barrel, while West Texas Intermediate (WTI) crude rose by 80 cents (equivalent to 0.87%) to $92.47.
Price Increases in the Oil Market
Brent crude rose by 7.8% last week, while West Texas increased by about 10%, as oil flow from the Strait of Hormuz has sharply decreased. Maritime information company Maersk stated that Saturday's attacks have heightened tensions in the Persian Gulf and added that commercial tankers are now being deliberately used as a tool for economic pressure, severely undermining the previous distinction between military confrontation and commercial shipping.
Read more: J.P. Morgan Declares Oil Market Outlook Uncertain
Decrease in Traffic in the Strait of Hormuz
Data from analytical company Kpler released on Monday shows that an average of 10 commercial vessels have passed through the Strait of Hormuz daily over the past 10 days, the lowest figure since May. Priyanka Sachdeva, head of market insights at Philip Nova, said: "If tanker traffic significantly decreases, the market may price in a much larger supply shock; and there are signs that this is happening."
Future Predictions for the Oil Market
The OPEC+ group announced in a statement on Sunday that it is maintaining its oil production policy for October unchanged, as it needs to agree on new quotas before deciding on the next production steps. Analysts at ANZ wrote in a note: It seems that a prolonged halt along with calculated military actions by the U.S. and Iran is the most likely scenario and will likely delay the full reopening of the Strait of Hormuz.
They added: Oil exports are expected to remain limited until the end of 2026, and then gradually reopen from late in the final quarter of 2026, with a return to pre-war transit volumes not expected until late in the first quarter or early in the second quarter of 2027.
Read more: Emmanuel Macron Calls for the Re-release of Emergency Oil Reserves in Europe · WTI Oil Prices Drop Due to Saudi Export Issues
