Oil Spikes on Strait Tensions, Eases as US Moves to Loosen Supply Choke Point

Oil prices surged before easing a bit as markets reacted to escalating tensions in the Middle East and signs of the US loosening Iran’s grip over the Strait of Hormuz.

Crude prices had rallied as much as 6% after Iran intensified attacks on vessels and energy infrastructure, with Brent futures at $114.44 per barrel and West Texas Intermediate (WTI) crudeat around $106 on fears of a severe supply disruption through the Strait—one of the world’s most critical oil transit routes.

Slight Ease

Prices eased slightly on signs that the US was taking steps to loosen Iran’s effective closure of the Strait as Brent slipped to $113.2 per barrel and WTI to about $104.4.

The US has started operations aimed at restoring shipping flows through the vital waterway of the Strait of Hormuz, including escorting vessels and helping stranded ships exit the Gulf. The escorting of at least one US-flagged vessel provided some relief to markets.

But the easing in prices remains limited as the strait of Hormuz, which accounts for roughly a fifth of global oil and LNG shipments, continues to face significant disruption, with traffic remaining severely constrained as hundreds of vessels still are stranded, reportingminimal movement despite American efforts to restore normalcy and navigation.

Risks Remain

Moreover, geopolitical risks remain elevated. Iran has continued to retaliate against US actions, including strikes on ships and energy facilities, while warning against foreign military presence in the region. This ongoing escalation has kept traders on edge, with supply concerns far from resolved.

The current price action highlights a market caught between short-term relief and structural supply fears. On one hand, US intervention is beginning to ease immediate bottlenecks and could gradually normalise flows. On the other, the absence of a ceasefire or diplomatic breakthrough means the risk of further disruption remains high.

Time Taking

Analysts note that even with partial reopening efforts, it could take time for supply chains to stabilise, especially given the security risks and uncertainty around safe passage. At the same time, global inventories are tightening and alternative supply routes remain limited, reinforcing a firm underlying bias in crude prices.

For now, oil markets remainhighly sensitive to geopolitical headlines. While prices have stepped back from their recent peaks, they continue to trade at elevated levels, with volatility likely to persist as developments around the Strait of Hormuz unfold.

In essence, crude has eased—but only after sprinting higher, and with the road ahead still fraught with uncertainty.

Source:

• rates from oilprice.com