Crude Oil
Crude Rally Broadens as Red Sea Threats Compound Hormuz Disruptions
Crude prices extended their rally this week as the conflict between the US and Iran continued to restrict tanker traffic through the Strait of Hormuz, while Houthi threats introduced an additional source of risk in the Red Sea. Despite a late-week pullback, prices remained sharply higher as traders assigned a larger geopolitical risk premium to the growing threat surrounding Middle Eastern crude exports. The WTI prompt-month contract settled Friday at $89.31/Bbl.
Hopes for de-escalation faded as the US extended its military campaign against Iran to a thirteenth consecutive day, while Tehran continued targeting commercial vessels attempting to transit Hormuz. Tanker traffic through the waterway has slowed to a fraction of normal levels. Analysts at HSBC Holdings estimated that traffic averaged only four ships per day over the past week, compared with 29 during the first week of July.
The market’s attention increasingly shifted toward the Red Sea after Yemen’s Houthi forces announced a blockade on Saudi maritime traffic and later claimed missile and drone attacks against two Saudi oil tankers. The development is particularly significant because Saudi Arabia has increasingly relied on pipelines to move crude west to Yanbu, allowing some exports to bypass the disruption in Hormuz. That alternative route has helped preserve physical oil flows, but the Houthi threat now places another major outlet for Saudi crude at risk.
The market ends the week facing supply risks across two of the Middle East’s most important shipping corridors. For now, crude barrels continue reaching the global market, preventing traders from fully pricing a severe supply disruption. However, deteriorating confidence in both Hormuz and the Red Sea leaves prices increasingly sensitive to additional tanker attacks, prolonged shipping delays or any direct damage to energy infrastructure. AEGIS maintains a neutral view on price.