Oil prices pushed higher on Wednesday after two vessels were struck in the Strait of Hormuz and Iranian officials told Reuters that Tehran is deploying new tactics to target ships, deepening fears about energy supplies from the world’s most important oil chokepoint.
The United Kingdom Maritime Trade Operations said a container ship and a tanker were hit by unknown projectiles in the strait on Tuesday, according to Reuters. Iranian officials said Tehran had begun using different offensive tactics against vessels it considers in violation of its restrictions about 10 days ago, and that the campaign is aimed at keeping oil prices high and influencing next month’s US midterm elections.
What it means for fuel prices
Brent crude futures rose 63 cents to $106.32 a barrel, while US West Texas Intermediate crude gained 66 cents to $94.80, according to Reuters. Both benchmarks had risen more than $1 earlier in the trading session before paring some gains. The International Energy Agency warned on Wednesday that diesel markets will remain tight well into 2027, with diesel benchmarks still nearly double the price of crude. For drivers, that means the pump-price relief many hoped for this autumn may be slow to arrive.
Analysts say Iran is using its geography as leverage. “Iran is well aware of its geographical importance and the havoc higher oil prices can inflict on the global economy, and it may not shy away from using this leverage,” said Priyanka Sachdeva, head of market insights at Phillip Nova. The strait carries about a fifth of the world’s oil, and the current crisis follows US-Israeli strikes on Iran in late February that opened this phase of the conflict.
A wider escalation
Iran’s Revolutionary Guards said early Wednesday that a container ship carrying more than 2,500 containers sank south of the strait after hitting a naval mine, claiming it had taken an unauthorised route. Separately, Iran-allied Houthi rebels attacked an administrative building belonging to Saudi Aramco in Dhahran, causing a limited fire, according to Saudi Arabia’s energy ministry. Riyadh’s international airport has been hit four times, with a strike on Saturday killing 13 people, reports said.
Investors are already betting that maritime infrastructure is only growing more valuable: a $3 billion autonomous ship yard broke ground at the Port of Brownsville this month. And Kentucky declared Manufacturing Month on a run of record investment claims, a sign that factory momentum continues even as energy costs bite.
