Oil nears $90/bbl as US disables another vessel in the Gulf

Brent crude’s price continues to climb higher as the battle in the Strait of Hormuz rages on.

IMAGE: The blocked Strait of Hormuz. Getty Images

The US Central Command (CENTCOM) has disabled a third cargo vessel, the Panama-flagged M/V Vela Nova, as it allegedly attempted to transit the Gulf of Oman and violate the US blockade by sailing toward an Iranian port.

The US CENTCOM “fired two hellfire missiles into the Vela Nova’s engine room after the ship’s civilian crew ignored repeated warnings from American forces,” it said on social media platform X.

The ship is no longer transiting to Iran, the US CENTCOM added. As of yesterday, the US CENTCOM has redirected 55 commercial vessels, disabled three, and boarded two to prevent ships from entering or departing Iranian ports.

Meanwhile, Tehran has reiterated that the Strait of Hormuz will remain closed unless Washington agrees to the six sweeping conditions it announced earlier this week.

The secretary of Iran’s Supreme National Security Council Mohsen Rezaei said Tehran will reopen the strait only after Washington unfreezes all Iranian funds, Iran’s semi-official Tasnim news agency reported.

Tehran previously floated terms that will grant it oversight of incoming vessels through the strait and tracking capabilities for outgoing ships, while continuing to demand that any pact formally acknowledge its security in the strategic corridor.

Unfreezing blocked Iranian assets represent far more significant geopolitical compromises than merely agreeing to navigation protocols, according to market analysts.

“Current rhetoric suggests any potential deal is still some way off, meaning risks remain skewed to the upside for oil prices,” two analysts from ING Bank noted.

Strait of Hormuz traffic still in shambles

Shipping volumes through the Strait of Hormuz continue to decline as last week's optimism surrounding a potential US-Iran deal has quickly dissipated.

Only ten vessels transited the strait in either direction on Tuesday, with four in dark mode, market intelligence firm Windward reported.

Although yesterday’s transit volume is higher than the six crossings noted on Monday, vessel traffic remains well below the pre-war average of 140 daily transits.

Movement through the strategic waterway had picked up slightly, amid a short-lived US-Iran memorandum of understanding between mid-June and early July. Since its collapse, overall maritime activity in the region has tumbled once again.

“Despite clear signs of progress in recent days, the tenor of the rhetoric and growing distrust between the US and Iran mean things could go from bad to worse once again,” ING Bank’s analysts added.

By Aparupa Mazumder

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