Oil shipments through Strait of Hormuz plunge as US-Iran conflict resumes
After a brief recovery following a US-Iran memorandum, oil flows through the Strait of Hormuz have fallen to 3-5 million barrels per day, pushing Brent and WTI prices above $84 and $79 per barrel respectively.
Oil volumes moving through the Strait of Hormuz have dropped sharply after a short rebound that followed a US-Iran memorandum of understanding. Goldman Sachs estimates that daily shipments fell from about 10 million barrels in early July to between 3 million and 5 million barrels by July 15, leaving the market short roughly 13.4 million barrels per day of Gulf supply.
The decline coincides with renewed fighting between US and Iranian forces, including a fifth consecutive day of US strikes aimed at limiting Iran’s capacity to target commercial shipping. US Central Command reported that a second naval blockade of the strait, launched on Tuesday, has already diverted two commercial vessels.
The reduced flow has lifted crude prices, with Brent futures gaining more than 8% over the past five days to trade above $84 a barrel and US WTI futures rising to over $79 a barrel.
"Markets had initially expected flows to normalize following the US-Iran memorandum of understanding signed on 17 June," said Lu Ming Pang, vice president of gas & LNG research at Rystad Energy. "However, those expectations have failed to materialize, and the latest escalation has further reduced the likelihood of a near-term recovery."