NEW YORK CITY, New York: Oil prices surged about seven percent on July 29, with Brent crude climbing above US$90 a barrel, as renewed military action in the Middle East and fresh threats to shipping through the Strait of Hormuz heightened concerns over global oil supplies.
Brent crude futures rose $6.16, or 7.33 percent, to $90.25 a barrel by late morning in New York, while U.S. West Texas Intermediate crude gained $5.40, or 6.81 percent, to $84.65.
“Renewed military strikes in the Middle East and Iranian officials reiterating that they want to control shipping activity through the Strait of Hormuz amid depressed oil flows through the strait are lifting oil prices again,” UBS analyst Giovanni Staunovo said.
The U.S. and Saudi Arabia launched strikes on Iran-backed groups in Iraq on July 29, blaming them for drone attacks on Saudi oil facilities.
The strikes followed a U.S. military announcement that it had thwarted a surprise Iranian attack on American troops in the region. Iran said it had fired on ships in the Strait of Hormuz and at U.S. bases in Jordan.
Oil prices climbed further after President Donald Trump told Fox News that additional strikes against Iran were planned.
Attention also remained focused on the Strait of Hormuz after a senior Iranian official said that Tehran had rejected Oman’s proposal for joint regional management of the strategic waterway.
“We believe Brent oil prices will continue to whipsaw in the $80-$100 per barrel range in the near term as the conflict ebbs and flows in the Middle East,” said Suvro Sarkar, head of energy research at DBS Bank.
Only a handful of commodity vessels have passed through the Strait of Hormuz this week. Meanwhile, five ships transited the Bab el-Mandeb Strait on July 29, an alternative route for Saudi oil exports to Asia, after 39 vessels used the passage on July 28, the highest daily total since July 19.
The Houthis are also considering imposing fees on commercial ships sailing through the southern Red Sea, regional sources told Reuters. Separately, six sources said China has held direct talks with the group to allow its oil tankers to pass through the area without being attacked.
“From what I can see, their success in stopping flows through the Bab el-Mandeb is nowhere near as effective as in the Strait of Hormuz, though it appears more ships are entering than exiting,” said Scott Shelton, energy specialist at TP ICAP.
Supporting prices further, U.S. crude inventories fell by 7.2 million barrels last week to 404.5 million barrels, the lowest level since 2018, according to the Energy Information Administration. Analysts had expected a draw of 1.3 million barrels.
Oil also found support from expectations that OPEC+ could pause planned production increases for three months beginning in October after completing its scheduled output restoration.
