Oil markets are again on edge as Iran intensifies attacks on shipping in the Strait of Hormuz, eight months after the US-Israel war on Iran began in February. Brent crude traded around 106 dollars a barrel on 14 October, while US benchmark West Texas Intermediate stood near 95 dollars. Prices are still far above pre-war levels, and analysts say persistently high insurance costs and the risk of a return to full-scale fighting are keeping a heavy risk premium in the market.
The latest turn has been sharp. Shipping data from Kpler showed average daily oil flows through the strait falling to about 11.6 million barrels in the week to 13 October, down from a baseline of roughly 17.2 million. That is a reversal from late September, when exports from the region briefly climbed above pre-war levels as US ships escorted tankers out of the Gulf. Iran has said it is expanding surveillance and deploying new units to target vessels. US Central Command insists that American forces and regional partners control the waterway, and says it helped move more than 19 million barrels of crude through on Monday alone.
The conflict is spreading beyond the strait. The Houthis, who are allied with Iran, reportedly struck an administrative building belonging to Saudi Aramco in Dhahran, causing a small fire, and fighting between the Houthis and Saudi Arabia is adding to supply fears.
Governments are trying to cushion the blow. The G7 agreed last week to release 100 million barrels from emergency reserves, although some observers note it forms part of a larger plan announced in March. Trump also said he spoke with Russian President Vladimir Putin, with Russia expected to supply extra diesel to global markets. With US midterm elections approaching and fuel costs rising, pressure for a resolution is growing.