On Monday evening, the U.S. conducted strikes targeting Iranian military assets, including command centers and missile launch sites, in response to ongoing threats to commercial shipping in the Strait of Hormuz. This strategic waterway is crucial, handling about 20% of the world's oil traffic.
Concurrently, the Houthis declared a maritime embargo against Saudi Arabia, which could jeopardize approximately 2.5 million barrels per day of Saudi oil exports. The U.S. Central Command reported that it has facilitated the transit of around 900 commercial vessels and 450 million barrels of crude oil through the strait since early May, indicating the importance of maintaining open shipping lanes.
Oil prices reacted to these developments, with Brent crude futures briefly rising before settling lower. Analysts from ING noted that while there are hopes for a proposed 10-day ceasefire, significant divisions remain between the U.S. and Iran. The geopolitical risks are compounded by President Trump's statements promising retaliation for attacks on American troops.
Jorge León from Rystad Energy highlighted that any disruption in the Bab el-Mandeb Strait could severely impact Saudi oil shipments, emphasizing the market's reliance on alternative routes like the East-West pipeline. If tensions escalate without a ceasefire, the potential for a sharp increase in oil prices looms large