Global oil prices surged on Monday, with Brent crude briefly exceeding $82 a barrel, as attacks on ships near the Strait of Hormuz intensified fears of disruption to vital oil supplies. The price of U.S. Crude also climbed, rising 3.9 percent in early trading, according to reports from multiple financial news outlets.
The attacks, claimed by Iran’s Islamic Revolutionary Guard Corps (IRGC), targeted three U.S. And UK oil tankers in the Gulf and the Strait of Hormuz, alongside missile and drone strikes on military bases and civilian infrastructure across the region. Shipping data indicated hundreds of vessels, including oil and gas tankers, have dropped anchor in nearby waters, bracing for further disruption. An official from the European Union’s naval force Aspides reported receiving radio transmissions from Iran’s Revolutionary Guards stating that “no ship is allowed to pass the Strait of Hormuz,” though Iran has not formally confirmed any such order.
The Strait of Hormuz, a narrow waterway connecting the Persian Gulf to the Gulf of Oman and the Arabian Sea, is a critical chokepoint for global oil shipments. Approximately 20% of the world’s oil supply, and a similar percentage of liquefied natural gas, passes through the strait daily. Experts describe it as strategically vital, with most crude originating from Saudi Arabia, the United Arab Emirates, Iraq, Kuwait, Qatar, and Iran.
Marine traffic through the strait has slowed to a trickle since hostilities began last week, heightening concerns about constrained oil supplies and sharply rising energy costs, Wall Street analysts said. The U.K. Maritime Trade Operations Center has reported attacks on several vessels in the area, alongside elevated electronic interference to ship navigation systems. “Infrastructure is at risk throughout the region, and it’s not just at risk because of deliberate attacks, but also inadvertent attacks,” said Kevin Book, managing director at Clearview Energy Partners. “Shrapnel and debris from missile interceptions can fall onto facilities and disable them too, and so there are a number of challenges that come from this kind of conflict in an area with so much energy production.”
The waterway, roughly 100 miles long and 21 miles wide at its narrowest point, is capable of handling the world’s largest vessels. However, the current situation has prompted shipowners and insurers to reassess the risks of transit, leading to the slowdown in traffic. Jorge Leon, head of geopolitical analysis at Rystad Energy, stated that the effective halt of traffic through the Strait of Hormuz is preventing approximately 15 million barrels per day of crude oil from reaching markets.
The conflict is occurring amid a broader escalation of tensions between the U.S., Israel, and Iran. The potential for a prolonged closure of the Strait of Hormuz remains a significant concern, with experts warning that it could sharply drive up oil prices. As of Tuesday, no resolution to the situation has been announced, and tanker traffic remains significantly reduced.
