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Oil Prices Stay Above $85 as Hormuz Closure and Iran Sanctions Tighten Market
🇴🇲 Oman /Economy & Trade

Oil Prices Stay Above $85 as Hormuz Closure and Iran Sanctions Tighten Market

From Times of Oman · () English

Translated from English and summarized by DistantNews. Read the original for the full story.

At a glance

Analysis Documents & data Ongoing story
  • Kamco Invest said crude prices stayed above $85 a barrel in August as shipping disruptions through the Strait of Hormuz and Red Sea continued.
  • The IEA and OPEC lowered their 2026 demand forecasts, but transit bottlenecks and tight refined-product supplies supported prices.
  • More than 660 million barrels have reportedly moved through the Strait under US military escort since May, while restoring 50% to 60% of normal volumes could push Brent toward $70.

Oil prices remained above $85 a barrel in August as the closure of the Strait of Hormuz and continuing disruption in the Red Sea kept the market under pressure. Kamco Invest said elevated shipping costs and the unresolved US-Iran conflict outweighed weaker demand expectations and bearish inventory trends.

The Kuwait-based investment firm said oil company executives estimated that shipping costs linked to the Hormuz closure added about $20 million to the premium paid by buyers, even though physical crude in the region remained affordable. Refined products also struggled to leave the region, creating downward pressure on crude while supporting product prices.

Although physical crude in the region remains affordable, the elevated shipping cost of around $20 million adds the premium for buyers.

— Kamco InvestThe investment firm described how disrupted shipping through the Strait of Hormuz was supporting oil prices.

The United States recently announced sanctions on 60 entities linked to Iran in an effort to limit Iranian oil exports. Kamco said the sanctions had so far had little effect on prices. US military escorts have allowed more than 660 million barrels of oil to pass through the strait since May 2026, showing that the key route remains partly operational, although shipping activity is still below normal.

The market has remained tight instead of experiencing a late summer pullback in prices, mainly led by severe geopolitical risk premiums stemming from the ongoing US-Iran conflict.

— Kamco InvestThe report attributed the lack of a seasonal price decline to geopolitical tensions.

The report said a recovery to 50% or 60% of pre-war transit volumes could revive fears of oversupply and pull Brent crude back toward $70 a barrel. That possibility has not yet overcome the market’s geopolitical risk premium.

Demand forecasts have weakened. The International Energy Agency expects global oil demand to fall by 1.6 million barrels per day in 2026, revising its previous forecast down by about 510,000 barrels per day. OPEC cut its demand-growth forecast to 580,000 barrels per day, its fourth consecutive downward revision. At the same time, global demand for refined products exceeds available supply in some fuel categories. US distillate inventories stood at 105.6 million barrels, 13% below the five-year average, keeping diesel supplies tighter than crude and encouraging refiners to secure immediate deliveries.

While this escorted flow mitigates the risk of a total supply cutoff, shipping activity remains below normal.

— Kamco InvestThe report assessed the effect of US military escorts on oil movements through the Strait of Hormuz.
About this summary

Originally published by Times of Oman in English. Translated, summarized, and contextualized automatically by DistantNews, with a note on how the source frames the story. Not individually reviewed before publishing. How this works.

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