Oil Prices Rise As Strait Of Hormuz Attacks Spur Supply Fears

Crude prices extended their upward trajectory in volatile Wednesday trading following a wave of projectile strikes on commercial tankers and an escalating naval blockade in vital Middle East export routes. Brent futures rose 35 cents, or 0.4%, to reach $89.26 a barrel by 1219 GMT, heading for a sixth day of gains according to Reuters reporting. Meanwhile, U.S. West Texas Intermediate crude increased 57 cents, or 0.7%, landing at $83.77 a barrel, heading for a fifth daily gain. Both contracts had earlier surged past $1 before dipping temporarily as traders weighed shifting inventory reports.

Strait of Hormuz Tanker Attacks and U.S.-Iran Diplomatic Deadlock

The immediate catalyst for the price surge involved physical assaults on shipping lanes connecting the Persian Gulf, the Gulf of Oman, and the Red Sea. Ship manager Dynacom Tankers Management identified the vessels as the Liberia-flagged supertanker Acheloos and the Malta-flagged fuel tanker Kavomaleas, the latter of which sustained strikes from two separate projectiles that triggered an engine room fire and forced an evacuation of the crew.

Shipping data underscores the rapid contraction of commercial traffic through these choke points. Total vessel transits through the Strait of Hormuz fell to a one-week low of eight on Tuesday, a sharp drop from normal pre-war volumes that typically see between 125 and 140 vessels pass daily. The United Kingdom Maritime Trade Operations agency confirmed the projectile strikes off the Omani coast, noting that shipping continues to navigate the corridor despite ongoing airstrikes.

Hopes for a diplomatic off-ramp faded as ceasefire negotiations between Washington and Tehran hit a firm barrier. A senior Iranian source told Reuters that no discussions are underway to extend the bilateral ceasefire because Tehran views the initial agreement as having no fixed start date and therefore nothing to prolong. The breakdown follows a collapsed 14-point framework from June, leaving market observers to question the viability of any near-term stability. For maritime users…the diplomatic track should be treated as contested rather than stabilizing, said Dimitris Ampatzidis, maritime risk and compliance manager at MarineTraffic, in an update cited by WWD. The key question is no longer only whether the MOU can support predictable passage, but whether the parties can re-establish any credible de-escalation mechanism while physical attacks and route uncertainty continue.

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Red Sea Blockade and AIS-Dark Tanker Operations at Yanbu

The threats have triggered an immediate chilling effect on commercial navigation. Tanker traffic through the Bab el-Mandeb Strait dropped to a multi-month low of just 11 tankers carrying commodities on Sunday, according to Kpler shipping data reported by Oilprice.com. Of those 11 ships, seven were oil tankers—four outbound and three inbound. Two of the inbound vessels were very large crude carriers headed for the Saudi Red Sea port of Yanbu to load crude, while the third was a Russian-linked ship. Outbound tankers carried crude from Saudi Arabia, the United Arab Emirates, and Russia to China, alongside one cargo bound for Pakistan.

As risk perceptions spike, ship operators are altering tactics to evade targeting. Maritime intelligence firm Windward noted that at least one tanker carrying Saudi crude transited the Bab al-Mandeb Strait last week with its transponder switched off.

U.S. Crude Inventories and Long-Term Market Forecasts

Supply concerns were partially counterbalanced by inventory data and regional infrastructure updates. Market sources citing American Petroleum Institute data said U.S. crude inventories rose sharply by about 9.1 million barrels, while gasoline inventories fell by 1.5 million barrels and distillate stocks dropped by 596,000 barrels. Haitong Futures noted that if the Energy Information Administration confirms the large crude buildup, it could alleviate immediate market tightness.

In Libya, the National Oil Corporation reported that fires at fuel storage tanks in the Zawiya oil complex had been brought under control, removing another potential flashpoint for upward price pressure. Looking further ahead, the EIA expects significant disruptions to Middle East crude supplies to persist through the end of 2027, estimating that 2026 Brent crude prices will average $86.81 a barrel and WTI will average $80.88 a barrel.