Brent Oil Price Hits June High Amid Strait of Hormuz Tensions and Ship Fire

Brent crude oil prices climbed to their highest point since June, reaching $90.50 per barrel, as escalating military tensions between the United States and Iran intensified. The price surge occurred amidst a significant reduction in shipping traffic through the critical Strait of Hormuz over the weekend.

Data from LSEG indicated that only four ships transited the strait on Sunday, down from eight on Saturday. This decrease reflects growing concerns over maritime security, as both the U.S. and Iran have increasingly targeted shipping. The U.S. government claims to be enforcing a sea blockade of Iranian ports, while Iran has taken action against vessels it deems in violation of the strait's regulations. The Strait of Hormuz is a vital chokepoint, typically handling about one-fifth of the world's oil trade.

Adding to the instability, a ship caught fire near Oman in the Strait of Hormuz late Sunday, according to the UK Maritime Trade Operations (UKMTO). The cause of the fire remained unclear, and ships were advised to proceed with caution. Iranian Revolutionary Guards claimed two oil tankers were blown up on the southern route, warning that the strait is unsafe for oil and gas transport as long as U.S. "aggression" persists.

The disruption has also impacted liquefied natural gas (LNG) transport. No LNG tankers have been registered passing through the strait since Thursday. Despite these hindrances, LNG production in Qatar and the United Arab Emirates remains relatively stable, leading to a buildup of LNG on waiting ships in the Gulf. As of mid-July, seven laden Qatari LNG tankers were estimated to be carrying 570,000 tons, with nearly 1.9 million tons of LNG capacity currently in the region.

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As long as the US aggression in the region continues, the strait will not be safe for the transport of petrochemical products or for a single drop of oil and gas.