Oil Rises After Attacks Near Strait of Hormuz Renew Supply Fears

By Anushree Mukherjee

July 7 (Reuters) – Oil prices rose on Tuesday after reports of attacks on vessels near the Strait of Hormuz revived fears of disruptions to shipping through the critical energy transit route.

Brent crude futures LCOc1 gained 61 cents, or 0.85%, to $72.60 a barrel, while U.S. West Texas Intermediate crude CLc1 rose 49 cents, or 0.71%, to $69.04 a barrel at 1140 GMT.

“The overriding theme this morning is a ship being shot at in the Strait of Hormuz,” Saxo Bank analyst Ole Hansen said. “That’s bringing some geopolitical risk premium back into the price. It’s not a lot compared with what we’ve seen in the past, but it’s the main driver behind the bid in the market.”

“So if there’s any further escalation, then $75 would be the natural level to look at next ahead of $80.”

A Qatari LNG tanker and a Saudi-flagged crude oil tanker were damaged near the Strait of Hormuz, sources said on Tuesday, after reports that Iran’s Revolutionary Guards fired missiles at ships in the waterway overnight.

Talks to reach a final deal between Tehran and Washington will not take place if U.S. threats continue, Iran’s foreign minister said on Tuesday, following U.S. President Donald Trump’s threat to “finish the job” unless a deal is done.

Investors are monitoring talks between the U.S. and Iran and their implications for shipping through the Strait of Hormuz, which prior to the beginning of the Iran war carried a fifth of the world’s daily supply of oil and LNG.

Societe Generale said the oil market is expected to shift from a deficit into a surplus in late 2026 and through 2027 as supply growth outpaces slower demand growth.

The bank cut its oil price forecasts to $75 a barrel for the fourth quarter of 2026 from $83 previously and to an average of $73 a barrel in 2027 from $79, adding that inventories should gradually rebuild, although volatility is likely to remain high.

Saudi Arabia is considering expanding the capacity of its crude oil pipeline to the western Red Sea coast, five sources close to the matter said, which would enable the kingdom and possibly its neighbors to transport more oil without using the Strait of Hormuz.

Appetite for buying Saudi crude is limited as even after the biggest price cut in more than two decades for Saudi Arabian crude oil sold to Asia, meaning some rival Gulf supplies are still cheaper.

Also on Tuesday, Kyiv’s military said Ukrainian drones struck eight tankers from Russia’s “shadow fleet” of aging vessels used to bypass sanctions that were delivering fuel to Crimea overnight.

(Reporting by Anushree Mukherjee and Pranav Mathur in Bengaluru and Emily Chow in Singapore; Editing by Jacqueline Wong, Jamie Freed and Barbara Lewis)

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This article contains reporting from Reuters, published under license.

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