FINWIRES · TerminalLIVE
FINWIRES

EMEA Oil Update: Crude Slips as Traffic via Hormuz Increases Despite Geopolitical Risks

By

Oil benchmarks edged lower on Thursday as energy markets weighed an increase in marine traffic through the Strait of Hormuz and ongoing diplomatic talks between Iran and Oman, against widening military flare-ups in the Middle East.

Brent futures declined 1.5% to $92.89 per barrel. Murban futures edged lower 0.3% to $88.08/bbl.

Several media outlets reported that the marine traffic through the Strait rose on Wednesday despite the escalation in hostilities. Ship tracking platform ShipFinder said Thursday that traffic rose to 31.

Amid the broader market caution, diplomatic channels remained active, with Iran-Oman talks concerning the management of the Strait of Hormuz continuing, according to the Iranian Labour News Agency.

Energy markets remain on edge as geopolitical friction threatens global supplies, analysts noted.

US and Saudi Arabia targeted Iran-backed paramilitary forces in Iraq in retaliation for drone strikes on Saudi energy infrastructure, marking the first time Riyadh has publicly joined US air strikes on Wednesday.

This coincided with a heavy wave of direct US strikes against Iran authorized by US Central Command following missile attacks on American forces in Jordan.

The conflict has actively spread to the Red Sea amid Houthi threats of a Saudi blockade.

RBC Capital Markets analysts noted in a Tuesday note that current oil prices may still be underestimating the risk of prolonged supply disruptions.

Despite temporary dips earlier in the week driven by brief pauses in bombing and premature optimism over diplomatic channels, commercial traffic through the Strait of Hormuz remains severely restricted.

Related Articles

Oil & Energy

US Oil Update: Crude Settles Higher as Trump's Iran Rhetoric, Mideast Conflict Rattle Markets

Crude futures settled higher in after-hours trading on Wednesday as escalating Middle East hostilities and hardline rhetoric from President Trump stoked fears of global supply disruptions.Front-month West Texas Intermediate crude futures rallied 6.7% to $84.60 per barrel, while Brent futures advanced 7.6% to $90.51/bbl.US crude oil inventories dropped by 7.2 million barrels to 404.5 million barrels last week, the Energy Information Administration said on Wednesday. Crude inventories were about 7% below the five-year average for this time of year, the EIA said.Macquarie strategists had expected a 2.5-mmbbl draw for the week ended July 24.Trump reportedly said that Iran "is going to get a beating" after the Islamic Revolutionary Guard Corps launched ballistic missiles at US military.His remarks follow reports that the IRGC targeted a US airbase and command center in Jordan with ballistic missiles, as Middle East hostilities escalate after a recent pause in hostilities.Iranian media also report an attack has occurred in an area near the Piranshahr border in northwestern Iran.On Tuesday, US and Saudi forces struck "multiple terrorist logistics and weapons sites" in eastern Iraq, in retaliation for over 30 drone attacks in the past three days by "Iran-aligned terrorists."Earlier on Tuesday, Saudi Arabia's Defense Ministry said that drones launched from Iraq by "Iran-affiliated terrorist militias" attempted to target petroleum facilities in the Gulf state.The US Treasury sanctioned two Iranian companies that charge for safe passage through the Strait of Hormuz and eight tankers linked to Iranian oil exports on Wednesday, alleging that the IRGC-backed network was operating an extortion scheme.Treasury's Office of Foreign Assets Control said the sanctions target the Persian Gulf Marine Insurance Company and HormuzSafe Marine Services Authority, which allegedly force vessels to buy mandatory maritime "insurance" to transit Hormuz.Soojin Kim, research analyst at MUFG, said the renewed escalation has restored a geopolitical risk premium to oil prices, with ongoing disruptions around Hormuz likely to keep markets volatile despite continuing diplomatic efforts.Meanwhile, the US Federal Reserve on Wednesday held its key interest rate steady in a range between 3.5% and 3.75%.Gelber & Associates strategists said traders were closely watching the US Federal Reserve interest rate decision, with improving risk sentiment across broader financial markets providing an additional tailwind for energy prices.Meanwhile, traffic through the Middle East energy chokepoints remains restricted, with Kpler data showing 12 and 41 confirmed crossings in the Hormuz and Bab el-Mandeb on July 28, respectively.The US Central Command said it has redirected 18 commercial vessels, disabled two, and boarded two as of July 28.Meanwhile, in its latest decision on Wednesday, the Fed kept interest rates unchanged at 3.50%-3.75%. While the decision was widely expected, the central bank's assessment of solid economic growth offered modest support to the oil demand outlook, although geopolitical tensions remained the dominant driver of crude prices.

Oil & Energy

Explosion Disrupts Egypt's Damietta LNG Hub, Kpler Says

An explosion at Egypt's Damietta Liquefied Natural Gas terminal has disrupted operations at one of the country's key LNG import hubs after damaging the Energos Winter floating storage and regasification unit and the GasLog Salem LNG tanker, Kpler said in an X post on Wednesday.According to Kpler, both vessels were moved offshore as authorities monitor the situation.An LNG carrier scheduled to discharge at the terminal has also departed, Kpler said.GasLog Salem had been due to begin service as a floating storage unit on Aug. 1 under a short-term agreement with state-owned energy firm Egas to support Egypt's LNG import program."With no official details yet on the cause, injuries or repair schedule, market attention is turning to the potential impact on near-term gas supply and terminal operations," Kpler said.

Oil & Energy

Hormuz, Red Sea Traffic Rises, but Maritime Risks Remain Elevated

Commercial vessel traffic through Middle Eastern waterways ticked up on Tuesday, but persistent security threats, sanctions risks, and geopolitical tensions continue to weigh on shipping operators, maritime data showed on Wednesday.The latest data from MarineTraffic for Tuesday showed 12 confirmed vessel crossings through the Strait of Hormuz, up by 50% over the day, compared with Monday when there were only eight verified crossings."Traffic was evenly split by direction, with 6 vessels entering the Middle East Gulf and 6 exiting," according to MarineTraffic.Strait of Hormuz routing was concentrated around the Iranian Unilateral Scheme, which accounted for 10 of the total 12 crossings on Tuesday.The rest of the two crossings were "Route Undetermined," while no crossings used the International Maritime Organization's Hormuz Traffic Separator Scheme.The marine data firm said that the increase in traffic volumes has not translated into a reduction in risk, noting that vessel behaviour and routing patterns remain important indicators of maritime security conditions."Traffic recovery should not be mistaken for lower risk," Kpler said.Meanwhile, Bab el-Mandeb crossings rose to 41 on Tuesday, up from 39 on Monday. Ship flow tilted towards vessels entering the Red Sea with 24 entries compared with 17 exits."For Bab el-Mandeb, the key indicators are dark transits, new U-turns, delayed entries and whether previously hesitant vessels continue to reattempt crossings," according to MarineTraffic.The IMO's daily Strait of Hormuz incident tracker showed the total number of confirmed maritime security incidents in the region to be 62 as of Monday.The IMO tracker provides a daily log of verified strikes on ships attempting to transit the Strait of Hormuz since the conflict began, with the earliest incident recorded on March 1.On Tuesday, the UK Maritime Trade Operations received a report of suspicious activity involving a tanker transiting the southern Red Sea."Vessels are advised to transit with caution and report any suspicious activity to UKMTO," the maritime security firm said.The incident adds to ongoing concerns over the safety of shipping routes around the Red Sea, where vessels have faced attacks, security incidents and disruptions linked to regional tensions.Meanwhile, the US Central Command said its forces continued enforcing a blockade against Iran, with operations resulting in the redirection of 20 commercial vessels, the disabling of two vessels and the boarding of two others as of Tuesday.Centcom's compliance enforcement has added uncertainty for shipowners and commodity traders navigating Middle East routes, as restrictions, sanctions enforcement and security risks shape vessel decisions.