Hormuz Tanker Traffic Slows to a Trickle

The Strait of Hormuz, a vital sea route for global oil transportation, experienced a significant slowdown in tanker traffic over the weekend, contributing to the rise in oil prices. As of the writing, Brent crude was trading at $88.62 per barrel, while West Texas Intermediate stood at $82.18 per barrel. Earlier, Brent crude had briefly surpassed the $89 mark before retracting.

In the previous weekend, 31 tankers navigated through the Strait of Hormuz, but this number dwindled to just five on Saturday, and no tankers were scheduled to pass through on Sunday, according to data from Kpler cited by Reuters. This figure does not include tankers operating in "dark mode," which could potentially increase the count.

The decline marks a stark contrast to last week's 5% weekly rise in oil prices, spurred by reports of slowing Hormuz traffic and recent attacks on tankers in the Persian Gulf. The United Arab Emirates has accused Iran of striking three ADNOC tankers last week, with two incidents occurring on Thursday and the third on Friday. Additionally, the Yemeni Houthis claimed responsibility for an attack on an Aramco refinery in Jazan.

This weekend, Iran's Foreign Minister Abbas Aragchi's assertion that Tehran does not intend to engage in peace talks with the United States, coupled with President Biden's promise that Americans would have to endure higher gasoline prices, further bolstered the upward trend in oil prices. Priyanka Sachdeva, an analyst from Phillips Nova quoted by Reuters, stated that oil prices have nearly recovered from the lows observed in early August, as hopes for a long-term resolution between the U.S. and Iran have waned and geopolitical risk premiums have returned to the market.

Bloomberg reported that tankers maneuvering in and out of Hormuz with transponders turned off were also supporting price stability. Meanwhile, news of a substantial increase in U.S. oil inventories helped maintain oil prices below their previous yearly highs.