Key Takeaways
- Fewer vessels crossed the Strait of Hormuz on Wednesday.
- Oil prices surged more than three percent after renewed military strikes between the U.S. and Iran.
- The Strait of Hormuz, a key oil transit route, saw reduced traffic amid heightened security concerns.
Shipping data from Kpler showed that seven vessels crossed the Strait of Hormuz on Wednesday, down significantly from 13 the previous day. The majority of these were on the Iranian route, with four empty vessels entering the Gulf, including three small oil tankers and a dry bulk carrier for grains.
On Tuesday, a Suezmax tanker carrying one million barrels of Saudi crude exited the strait with its transponder switched off, indicating caution among shipping operators. There were no Very Large Crude Carrier or liquefied natural gas tankers passing through on Wednesday, further highlighting the reduced activity in the region.
The U.S. military confirmed that it had fired on a ship attempting to break Iran's ports blockade, adding to the tension between the two nations. This action comes as both countries have escalated strikes across the Gulf, with Iran targeting U.S. facilities and announcing the closure of the Strait of Hormuz late Saturday.
Oil prices surged more than three percent on Monday after renewed military strikes between the United States and Iran reignited concerns over energy shipments through the Strait of Hormuz. Brent crude futures rose to $78.48, while US West Texas Intermediate crude climbed to $73.76 a barrel by 4:45pm PKT.
Analysts from UBS stated that the focus would remain on inbound tanker numbers, as lower traffic could impact production and support higher prices due to risk premiums and disruption risks. ANZ analysts noted that shipping operators were adopting a cautious approach, with inbound movements slowing under heightened security concerns.
The Strait of Hormuz, which carried about one-fifth of global oil and gas shipments before the conflict began in February, saw vessel traffic fall to a five-week low on Sunday. Six vessels transited the strait, according to Kpler data. The escalating attacks cast further doubt on the future of an interim US-Iranian agreement signed last month that aimed to reopen the strait and end the war after 60 days of negotiations.
Iran’s Revolutionary Guards announced on Monday they had attacked U.S. military bases in Kuwait and Bahrain, intensifying the conflict. The U.S. military confirmed it had fired on a ship attempting to break Iran's ports blockade, adding to the tension between the two nations.
The focus will remain on the number of inbound tankers as a lower number could impact production, so currently we see a risk premium but as well a disruption risk supporting prices.
Giovanni Staunovo, UBS analyst
