Brent crude jumps 3% as US-Iran strikes reignite Hormuz risk
Crude oil prices surged after a fourth round of US-Iran military strikes threatened the Strait of Hormuz, reviving a geopolitical risk premium that could derail the rebuilding of global energy inventories.
Brent crude climbed 3% to trade above $78 a barrel on July 13, while US benchmark West Texas Intermediate hovered near $74. The price jump followed a fresh exchange of military strikes between the US and Iran, marking the fourth round of American military action in a week. European natural gas prices also rose by as much as 2.7%.
The immediate market focus is the Strait of Hormuz, a chokepoint for nearly one-fifth of global crude oil and liquefied natural gas supplies. Iran declared the waterway closed "until further notice," though US Central Command rejected this claim. Centcom stated it launched further attacks to secure freedom of navigation, noting the operation was a response to Iranian strikes on a Cyprus-flagged container vessel.
Physical shipping data reflected the heightened tension. Only two oil product tankers approached the narrow passage on Sunday. However, the Joint Maritime Information Center stated that the southern shipping lane coordinated by Oman remains operational, preventing a complete physical shutdown for now.
The escalation has effectively ended a brief period of market optimism tied to a temporary peace agreement. US President Donald Trump declared that ceasefire "over," although he stated the US remains open to talks. Iran's Parliament Speaker and chief negotiator, Mohammad Bagher Ghalibaf, countered that the "era of one-sided deals is over," demanding Washington honour previous commitments on transit rights and Iranian oil exports before negotiations resume.
Supply chain risks
The conflict is expanding beyond the strait to directly target energy infrastructure. Iranian forces reportedly attacked a Kuwaiti oil drilling facility, the first direct strike on oil infrastructure in several weeks, alongside drone and missile attacks targeting American allies in Kuwait, Jordan, and Qatar.
The International Energy Agency warned on Friday that prolonged hostilities could disrupt efforts to rebuild global oil inventories later this year. Analysts caution that if the conflict further escalates to systematically target regional energy facilities, crude prices could push toward $100 per barrel.
