Brent Near Five-Month High At $110 After Iran Signals Tighter Control On Hormuz

Brent crude oil prices witnessed a rise on Tuesday, edging closer to a five-month peak, as tensions escalated around the Strait of Hormuz. Brent futures increased by 0.29% to $109.87 per barrel, while WTI benchmarked crude oil also climbed by 0.24% to $103.91 per barrel. The volatility in oil markets persists, driven by the ongoing US-Iran conflict, which has posed risks to shipping activities and regional energy infrastructure.

Earlier this year, Brent prices surged by nearly 80% due to mounting hostilities in the Middle East and the Russia-Ukraine war. Iran's First Vice President, Mohammad Reza Aref, expressed concerns about Iran potentially tightening its control over the Strait of Hormuz to safeguard national security. Aref stated that Iran had no choice but to assert dominance over the strategic waterway.

He also hinted at the possibility of guaranteeing safe passage for vessels from countries Iran deemed allies. However, Aref pinned the blame on Washington, warning that the United States would bear the consequences of the crisis. These remarks intensified apprehensions about the security of shipping along one of the globe's most crucial oil transit routes.

In the meantime, reports of Houthi attacks on a military training facility in Yemen and continued strikes against Saudi energy, airport, and military installations further complicated market uncertainty. While Gulf oil exports have shown signs of recovery, crude shipments from the region have rebounded to nearly 80% of their pre-conflict levels.

Nevertheless, refined petroleum product shipments remain limited, indicating that supply-chain issues have not yet been entirely resolved. Iraq has also reported a rise in export volumes, with crude shipments surpassing 3.4 million barrels per day this month. These exports are nearing prewar levels following substantial discounts offered by Iraq relative to regional oil benchmarks.

The recovery in shipments could potentially alleviate supply concerns, although further attacks or shipping restrictions could maintain crude prices in a state of uncertainty.