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Correction: EMEA Oil Update: Brent Surges Over 3% on Renewed US-Iran Clashes

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(Corrects Murban's closing price in the second paragraph.)

Crude oil benchmarks rebounded on Monday, as fresh fighting erupted in the Middle East, abruptly reversing the previous week's downward trajectory.

Brent gained more than 3% to $90.78 per barrel, while Murban crude futures closed at $95.75/bbl on Friday and were not trading at the time of publication of this update.

Analysts said that the rally was driven by an escalation in regional hostilities, including US military strikes against Iranian infrastructure and subsequent retaliatory actions in the region.

"The US struck Iranian rocket launchers that were reportedly preparing to deploy mines into the Strait of Hormuz, while Jordan's army intercepted eight missiles after Tehran's military claimed attacks against American forces in the kingdom," Saxo Bank analysts said.

The latest round of conflict escalated when US forces struck two Iranian rocket launchers on Larak Island in the Strait of Hormuz on Sunday.

In retaliation, Iran's Islamic Revolutionary Guard Corps launched missile attacks targeting US military bases in Jordan.

These exchanges dashed emerging optimism from Omani-led diplomatic talks that had previously sparked hopes for temporary shipping corridors and safe navigation frameworks, analysts noted.

"These developments have once again reduced the prospects of bringing the conflict to an end. However, with an estimated 6-8 million barrels per day of crude flowing through the Strait, the upside risk is for now being capped," Saxo Bank analyst added.

Lloyd's List Intelligence reported that shipping traffic across key Middle East chokepoints rose between August 17 and 23, with Strait of Hormuz transits climbing 27% to 108 total vessel crossings.

However, market analysts warn that underlying supply-demand fundamentals remain deeply strained.

In a note published on Saturday, Societe Generale analysts highlighted that while the US maintains a comfortable production standing, domestic inventories are exceptionally low and global spare capacity is rapidly eroding.

Analysts cautioned that with the market locked in a supply-constrained stalemate, deteriorating inventory realities will eventually overwhelm short-term policy rhetoric and verbal interventions.

What else is happening in Oil & Energy?

Oil & Energy

Oil Posts 1st Weekly Loss in 3 Weeks as Hormuz Shipping Corridor Hopes Offset Iran Sanctions

Crude oil markets posted their first weekly loss in three weeks on Friday despite new US sanctions on Iran as Oman-led diplomatic talks sparked hopes for temporary shipping corridors.West Texas Intermediate settled at $83.44 per barrel, down from $86.64/bbl the previous week, while Brent closed at $89.37/bbl, down from $93.70/bbl a week earlier.Throughout the week, regional diplomacy in the Middle East advanced as Oman mediated talks between Iran and international parties.By midweek, Iran and Oman agreed on a phased framework to establish a temporary joint navigational corridor and a joint mine-clearance project to restore safe commercial navigation.This followed visits to Tehran by Omani and Pakistani officials and a constructive meeting between Omani Foreign Minister Sayyid Badr Albusaidi and his Iranian counterpart."I am hopeful we will soon announce a temporary corridor for the Strait of Hormuz and practical arrangements to restore safe navigation," Omani Foreign Minister Sayyid Badr Albusaidi said in a social media post on X on Tuesday.These diplomatic moves coincided with conflicting claims regarding the security of the vital waterway.President Trump asserted that the US Navy had cleared or detonated all water mines in the strait, estimating that 10 million barrels transited the waterway on Tuesday, and warned that any attempt to lay new mines would trigger an immediate military response.However, US allies reportedly warned that the channel likely remains mined, reflecting persistent caution among operators.MarineTraffic and Kpler data indicated that while commercial traffic showed tentative signs of resilience such as a minor uptick to 121 crossings in the Hormuz, overall flows remained well below pre-war levels.Separately, Iran's Persian Gulf Strait Authority issued a statement blacklisting 45 tankers for violating local rules.On the geopolitical and economic fronts, the US administration unleashed a massive escalation in economic pressure against Tehran.On Monday, US Treasury Secretary Scott Bessent unveiled a global sanctions package dubbed "Operation Economic Outcast," targeting over 60 entities, individuals, and vessels across digital assets, technology, gold, aviation, and shipping sectors to sever Iran's global financial lifelines.The White House clarified that the US is not negotiating with Tehran and that port blockades will remain in force.Analysts pointed out that the sanctions' ultimate market impact hinges heavily on whether Washington can persuade major buyers like China, which strongly opposes unilateral measures, to curb purchases.The new set of sanctions against Iran is unlikely to significantly deepen the hit to the country's oil revenues unless Washington succeeds in persuading China to curb purchases, Rystad Energy strategists said in a note on Monday."Iranian crude exports have already fallen sharply because of the blockade, and Beijing is essentially the only significant buyer left. Unless China materially reduces purchases further, the additional impact on Iranian oil revenues could be relatively limited," Jorge Leon, senior vice president and head of geopolitical at Rystad Energy, said.Meanwhile, Washington moved to tighten financial pressure on Tehran once again on Friday.The US Treasury's Financial Crimes Enforcement Network proposed a rule to revoke Banque Misr UAE's correspondent banking access to US financial institutions as part of Operation Economic Outcast."Treasury promised to sever every economic lifeline Tehran has left and finally end the threat of the Iranian regime," Treasury Secretary Scott Bessent said.Treasury's Office of Foreign Assets Control also sanctioned the manager of Bank Melli's Dubai branch, along with a Hong Kong-based front company that helped launder funds for a sanctioned Iranian exchange house.Meanwhile, regional maritime threats remained prominent, underscored by a UK Maritime Trade Operations report detailing a confirmed security incident on Wednesday involving an oil tanker forced to anchor off the Omani coast, alongside an earlier attack near Yanbu, Saudi Arabia.Crude transits through the Strait of Hormuz have recovered to roughly two-thirds of pre-war levels, Saxo Bank analysts said, citing Goldman Sachs estimates.On the supply side, data from the Energy Information Administration, released Wednesday, showed US commercial crude oil inventories increased by 100,000 barrels to 428.9 million barrels for the week ended Aug. 21.The US oil rig count decreased by five, from 452 the previous week to 447 in the week ending Aug. 28, according to data from Baker Hughes (BKR) released Friday. The US had 412 oil rigs in operation a year earlier.The consolidated North American rig count, a key early indicator of future production levels, dropped by five to 799 from 804 the previous week.Meanwhile, money managers in the WTI crude futures and options markets maintained their net long positions in the week ended Aug. 25, according to the Commodity Futures Trading Commission's latest Commitments of Traders report released Friday.The data showed that money managers reported 203,162 long positions, up 7,531 from Aug. 18, while short positions were up 6,993 to 98,589.Money managers' net long position increased by 538 contracts to 104,573 contracts from 104,035 the previous week. This indicates little change in bullish positioning even as crude prices declined.

$BKR
Oil & Energy

US Oil Update: Crude Flat as US-Iran Talks Remain Deadlocked, Treasury Rolls Out New Sanctions

Crude prices largely held steady in after-hours trade on Friday even as the US Treasury moved to tighten sanctions on Iran, while diplomatic talks between the two countries remained stalled.Front-month West Texas Intermediate crude futures edged down 0.13% to $83.42 per barrel, and Brent futures slipped by 0.37% to $89.37/bbl.White House deputy press secretary Anna Kelly reiterated Friday that the administration was not scheduled to hold talks with Iran, according to reports.The Wall Street Journal reported Thursday that the Trump administration has told mediators it does not intend to return to the terms of the memorandum of understanding it reached with Iran in June.However, Iran struck a more measured tone. Iranian Foreign Minister Abbas Araghchi said on X Friday, "Putting diplomacy back on track isn't impossible."Meanwhile, Washington moved to tighten financial pressure on Tehran Friday.The US Treasury's Financial Crimes Enforcement Network proposed a rule to revoke Banque Misr UAE's correspondent banking access to US financial institutions as part of Operation Economic Outcast."Treasury promised to sever every economic lifeline Tehran has left and finally end the threat of the Iranian regime," Treasury Secretary Scott Bessent said.Treasury's Office of Foreign Assets Control also sanctioned the manager of Bank Melli's Dubai branch, along with a Hong Kong-based front company that helped launder funds for a sanctioned Iranian exchange house.Separately, Venezuela is considering leaving OPEC, according to a Bloomberg report citing people familiar with the development.The move comes amid improving US-Venezuela relations following the ouster of Nicolas Maduro, while Washington has taken control of Venezuelan oil sales, ING analysts said.Executives from several energy companies plan to sign oil production agreements in Caracas next week, with US Energy Secretary Chris Wright also expected to travel to Venezuela, the WSJ reported Friday, citing people familiar with the matter.The US Department of Defense is reportedly in talks to acquire a major stake in almost 17 Venezuelan oil fields, Bloomberg reported on Friday.Goldman Sachs estimates crude flows through the Strait of Hormuz have recovered to about two-thirds of prewar levels, while transit volumes have reached 6 million barrels per day to 8 million b/d, analysts at Saxo Bank said.According to RBC Capital Markets, US naval escorts appear to be supporting higher Hormuz exports through ship-to-ship transfers and tanker shuttle operations, with exports from inside the strait running about 1 million b/d above the four-week average last week.Shipping traffic rose across both Middle East chokepoints in the week of Aug. 17-23, with Strait of Hormuz transits climbing 27% to a post-peace deal high, according to Lloyd's List Intelligence on Thursday.Bab el-Mandeb volumes also posted double-digit gains across tankers, containerships and bulk carriers, even as sanctions pressure on Iran and Houthi attacks on Saudi-linked vessels kept risk elevated in both waterways, LLI said.However, flows through the strait remain far below normal, according to Gelber and Associates."Strait throughput remains near 5% of its prewar baseline, and it had a brief daily rebound that is yet to develop into a sustained recovery," Gelber and Associates said in a Friday note.With US-Iran negotiations stalled and traffic still severely constrained, the decline reflects growing confidence in alternative routes rather than a genuine normalization of Gulf flows, G&A said.Flows are improving through workarounds, but the waterway has not normalized, and the geopolitical situation remains unresolved.They added that stronger Saudi loadings and Iraq's offer to transfer crude outside the Persian Gulf indicate that regional producers are finding ways to move supply without relying on normal passage through the strait.

Oil & Energy

Hormuz, Red Sea Traffic Climb in Latest Weekly Tally, LLI Says

Shipping traffic rose across both Middle East chokepoints in the week of Aug. 17-23, with Strait of Hormuz transits climbing 27%, while Bab el-Mandeb volumes posted double-digit gains across vessel segments, according to Lloyd's List Intelligence on Thursday.US sanctions pressure on Iran and Houthi attacks on Saudi-linked vessels kept risk elevated in both waterways.Preliminary data for the total fleet transiting the Strait of Hormuz indicate 108 transits during the Aug. 17-23 period, up 27% from the previous week.This marks the highest weekly transit level since the collapse of the interim memorandum of understanding, according to LLI's analysis.Tanker and gas carrier movements rose over 50% during the period compared with the previous week, driven primarily by non-Iran-linked trade, LLI reported.The maritime intelligence firm noted that overall vessel volumes remain well below pre-crisis levels and beneath those recorded during the brief memorandum of understanding period.The week's developments included Washington rolling out a fresh round of sanctions and escalations against Iran, dubbed its "Economic D-Day" package.In response, Iran's Persian Gulf Strait Authority released a list of 45 ships, including tankers, which the PGSA said had breached unilateral transit regulations.Ships with connections to the UAE, Greece, and South Korea are on the list. Iran has also warned that vessels conducting ship-to-ship transfers or other business with blacklisted ships could also face sanctions, LLI said.LLI analysts said the developments have made the bunkering sector "directly exposed to sanctions risk.""This week's designation of a UAE-based, Greek-owned bunker supplier materially alters the compliance landscape for fuel suppliers, operators and maritime service providers," LLI said.The maritime data firm said preliminary estimates in the Strait of Hormuz show inbound traffic rose 23% over the week and outbound traffic 32.4% in the Aug. 17-23 window."Crude exports continue to move through shuttle tanker and ship-to-ship transfer networks that concentrate risk on a relatively small group of vessels and crews repeatedly operating in high-threat waters," according to the analysis.This has led to more tankers entering the trade, particularly Gulf state-owned tonnage and vessels linked to South Korea's Sinokor, LLI said.On the regional outlook, LLI said that Iran continues to pressure vessels using the southern route.Meanwhile, Iranian officials have maintained that the proposed Iran-Oman framework for the Strait of Hormuz seeks to manage commercial traffic as opposed to freedom of navigation through the Strait.Additionally, Red Sea shipping traffic also climbed during the period.In a separate note, LLI's Red Sea Brief showed weekly Bab el-Mandeb volumes also rose over the week in the Aug. 17-23 window.Tanker traffic increased 13.6%, containership traffic 10%, and bulk carrier traffic 12.2% compared with the prior week.All categories were up by "double digits, with figures likely to be revised upwards as more dark transits are identified," LLI said.Saudi-linked vessels continue to be the primary target of Houthi attacks, LLI noted, pointing to the Aug. 24 strike on the Bahri-owned VLCC Amzan off Yanbu."The attack fits the pattern established since the Houthis declared a naval blockade on Saudi Arabia on 20 July, with several Bahri-controlled vessels targeted in the weeks since," LLI said, noting that threat levels remain elevated in the region.