Oil prices slip as tankers continue to ply Middle East conflict zones

Oil prices saw a slight decline on Thursday, even as tensions in the Middle East intensified and tankers continued to transit through conflict zones. Brent crude futures fell 0.9% to $87.30 a barrel, while U.S. West Texas Intermediate (WTI) crude slipped by the same margin to $83.70 a barrel.

This dip follows a significant spike in prices in the previous session, which had reversed a sharp plunge experienced earlier in the week. Preliminary shipping data indicated that 39 commodity ships passed through the Bab el-Mandeb strait into the Red Sea on Tuesday, the highest number recorded since July 19. This suggests that while overall volumes may be reduced, oil continues to flow out of the region through various channels.

Analysts note that the increasing use of alternative routes and workarounds is gradually eroding Iran's leverage over the Strait of Hormuz, a critical chokepoint for global oil and gas transport. The U.S. and Saudi Arabia conducted strikes against Iran-backed forces in Iraq, marking Saudi Arabia's public participation in U.S. air strikes. This action was in retaliation for drone attacks on Saudi oil targets originating from Iraq. Meanwhile, Iran claimed responsibility for firing on U.S. bases in Jordan and striking three tankers in the Strait of Hormuz.

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While overall volumes are reduced, oil continues to leak out of the region through multiple channels, and additional workarounds are being explored. The longer this situation persists, the more these alternative routes and methods will erode Iran's leverage over the Strait of Hormuz.