Brent crude futures rose by 52 cents, or 0.672%, to $72.51 a barrel as of 2313 GMT, while U.S. West Texas Intermediate crude increased by 71 cents, or 1.03%, to $69.94 a barrel. The price surge follows renewed hostilities in the Middle East, impacting oil shipments through the vital Strait of Hormuz.
Brent crude experienced a 10.6% decline last week, marking its third consecutive weekly drop, as shipments through the Strait of Hormuz reached their highest levels since the onset of the U.S.-Israeli conflict with Iran in February. However, recent attacks on vessels, including a Qatar-linked oil tanker, have led to a slowdown in traffic and subsequent retaliatory strikes by the U.S. and Iran.
The market is now reassessing the potential for a swift recovery in oil supply from the Persian Gulf, according to ANZ analysts. Despite the recent U.S.-Iran agreement to halt hostilities and resume talks in Qatar, physical oil flows remain constrained due to tanker backlogs and damaged infrastructure.
“Despite the U.S.-Iran deal marking an inflection point for oil markets, physical flows are constrained by tanker backlogs, damaged infrastructure and production shut-ins.”
ANZ analysts
Saudi Aramco has resumed crude oil loadings at its Ras Tanura terminal after a nearly four-month halt, as Middle East producers increase output and exports. However, the terminal's operations were overshadowed by a helicopter crash on Sunday, which resulted in the deaths of 14 nationals.
"Despite the U.S.-Iran deal marking an inflection point for oil markets, physical flows are constrained by tanker backlogs, damaged infrastructure and production shut-ins," ANZ analysts noted. "It could take the remainder of the year before supply is near pre-conflict levels."
Background
The recent developments in the Middle East underscore the region's critical role in global oil supply, with the Strait of Hormuz serving as a key chokepoint for oil shipments. The ongoing tensions between the U.S. and Iran continue to pose risks to oil market stability.
As the situation evolves, market participants will be closely monitoring the progress of U.S.-Iran talks in Qatar and the impact of any further disruptions in the Strait of Hormuz on global oil supply and prices.
