Both Brent and WTI jumped more than 3% on Monday, as a weekend escalation revived the Hormuz risk premium in the market, although the relatively measured size of the move suggests traders are not yet expecting a complete collapse of the temporary truce. Analysts’ opinions were divided, with one doubting that a quick resolution was still possible after the weekend escalation, while another argued that the muted price reaction reflects the market’s view that this is an escalation within a fragile ceasefire rather than a complete collapse. Conflicting transit data is adding to the uncertainty facing traders: ship-tracking firm Kpler showed just six ships transiting the strait on Sunday, the lowest in five weeks, while a US official quoted by Axios estimated the true flow closer to 20 vessels coordinated with the US military plus others moving independently. With the International Energy Agency noting that global supplies remain 9.4 million barrels per day below pre-war levels despite a rebound in June, any continued sign of supply disruption, even if disputed, will have a significant impact on prices.
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The price of oil rises as no one can quite agree on the actual volume of traffic through Hormuz.
summary:
- Brent and West Texas Intermediate crude futures rose more than 3% on Monday as Iran expanded its strikes on Gulf states in the wake of the US attacks, threatening energy shipments through the Strait of Hormuz, according to Reuters.
- US President Donald Trump said on Sunday that the Strait of Hormuz remains open to commercial traffic, despite Iran’s announcement that it had closed the strait after it struck a ship traveling on an unapproved route, according to Reuters.
- Ship tracking data from Kepler showed that only six ships transited the strait on Sunday, the lowest number in five weeks, according to Reuters.
- A US official told Axios that about 20 commercial ships crossed the strait in coordination with the US military during the previous 24 hours, in addition to several ships that moved without US coordination.
- The Joint Maritime Information Center said the route along the Omani coast remains open for crossing, and a Chinese tanker also reportedly crossed separately via a route designated by Iran, according to Reuters.
- The International Energy Agency said in its monthly report that global oil supplies rose by 4.1 million barrels per day in June, but remained 9.4 million barrels per day below pre-war levels.
- Analysts expressed differing views on the importance of the escalation, with Reuters indicating that hopes for a quick solution may be in doubt, while another said that the weak price reaction in the market indicates that traders see the escalation occurring within a fragile truce rather than its collapse.
Oil prices jumped more than 3% on Monday after Iran expanded its strikes on Gulf states in response to US attacks, renewing concerns about energy shipments through the Strait of Hormuz even as conflicting reports emerged about the volume of actual traffic through the waterway, according to Reuters.
Brent crude futures and US West Texas Intermediate crude rose more than 3% after a weekend in which Tehran expanded strikes into Qatar and the United Arab Emirates while the United States launched more strikes on Iran, the latest exchange in a series of attacks to seize control of the strait. President Trump said Sunday that the Strait of Hormuz remains open to commercial traffic, which directly contradicts Iran’s announcement that it closed the waterway after it struck a ship traveling on an unapproved route.
Data on actual transport volumes has proven similarly contradictory. Ship tracking figures from Kepler showed that only six ships transited the strait on Sunday, the lowest number in five weeks, indicating a significant slowdown. However, a US official told Axios that about 20 commercial ships had transited the strait in coordination with the US military in the past 24 hours, with many moving without US coordination, a number that may indicate traffic is much closer to normal levels. Separately, the Joint Maritime Information Center said the route along the Omani coast remains open for crossing, and a Chinese tanker also reportedly crossed via a route designated by Iran.
The escalating strikes and a conflicting picture over shipping flows have cast further doubt on the future of the interim agreement between the United States and Iran signed last month, which was intended to reopen the strait and end the war after another 60 days of negotiations. This agreement has already provided some relief to global supplies, with the International Energy Agency saying in its monthly report on Friday that global oil supplies rose by 4.1 million barrels per day in June, although production remained 9.4 million barrels per day below pre-war levels.
Analysts remain divided on how to explain the latest outburst. One analyst said that hopes for a relatively quick resolution to the skirmishes may now be in doubt after the escalation that occurred at the weekend. Another took a more measured view, saying that the relatively limited size of Monday’s price rise suggests that the market views the current escalation as one occurring within a still-fragile truce, rather than evidence of a complete collapse of the ceasefire, although that assessment is still far from settled.
