Battle of Hormuz: Fresh attacks push Brent crude above $90/bbl

Brent crude’s price has broken above $90/bbl once again amid relentless fighting between the US and Iran.

IMAGE: Getty Images

Tehran and Washington have continued exchanging fire, with the US Central Command (CENTCOM) conducting the 11th consecutive day of strikes against Iran.

Overnight, CENTCOM targeted Iranian military operations and maritime capabilities, aircraft hangars, drone storage facilities and logistics infrastructure, it said.

The latest round of US attack comes shortly after Kuwait said it intercepted Iranian drones targeted toward US military sites in the region, Al Jazeera reported.

Meanwhile, commercial vessels continue to come under attack while attempting transit via the Strait of Hormuz, the United Kingdom Maritime Trade Operations (UKMTO) reported.

The vessel that came under attack about 8 nautical miles (NM) northeast of Limah, Oman, yesterday has been identified as the Kuwait-owned oil products tanker Kaifan, Bloomberg reported.

Over the last three months, Iran has attacked more than 30 commercial vessels transiting the critical waterway, according to CENTCOM.

The conflict widens its scope

In another blow to the market’s fading hopes of de-escalation, Yemen’s Iran-aligned Houthi militants have imposed a maritime embargo on vessels carrying Saudi Arabian crude oil through the Bab al-Mandeb Strait into the Red Sea.

Three Saudi oil tankers reversed course in the Red Sea yesterday after the Houthis declared a blockade on the region, Reuters reported.

Riyadh is highly dependent on the 1,200 km East-West Pipeline, funnelling about 70% of its crude exports through the Red Sea port of Yanbu to circumvent the Strait of Hormuz.

Brent crude’s price is now at a five-week high – consistently climbing since the hostilities resurfaced in recent days.

As navigation amid a multi-front military exchange grows increasingly perilous near the Strait of Hormuz and the Bab al-Mandeb Strait, the potential for upward pressure on oil prices will only intensify, according to market analysts.

“Factoring in the renewed disruptions from the Persian Gulf, risks to Saudi crude exports from the Red Sea… one may argue that Brent at just over US$91/bbl is undervalued. Particularly if these disruptions persist into August,” two analysts from ING Bank noted.

By Aparupa Mazumder

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