Oil gains as ship attack raises concern about Hormuz reopening

OIL rose as traders closely monitored shipments through the Strait of Hormuz after a vessel was struck by a projectile in the key shipping corridor off the Omani coast, renewing concerns about the safety for passing cargoes amid the US and Iran’s peace negotiations.

West Texas Intermediate gained over 2 per cent to settle around US$72 a barrel after four days of declines. Brent settled up about 2 per cent. The global benchmark had earlier erased all of its wartime gains as flows through Hormuz ramped up.

The unidentified cargo ship was hit on its side and sustained damage to the bridge while it was sailing to the southeast of Oman, UK Maritime Trade Operations (UKMTO) said. UKMTO advised vessels to “transit with caution”.

The Wall Street Journal reported the vessel was struck in an attack by Iran, and said that the strike damaged the ship’s bridge but caused no casualties.

If Iran is found to be behind the incident, which UKMTO classified as an attack, it would hit shipowners’ and crews’ fragile confidence that they can once again sail through the oil corridor safely.

The incident came as several commercial ships turned around while attempting to transit the strait, raising fresh doubts over how quickly flows through the chokepoint can normalise. The International Maritime Organization, the UN’s global shipping regulator said that it was pausing its evacuation operations in the strait.

“The combination of extremely strong products prices and the attack on a ship in the Strait or Hormuz has caused ships to turn around today,” TP ICAP analyst Scott Shelton said. “The IMO pausing the ship evacuation has driven up prices.”

Vessels had been steadily increasing transits through Hormuz since an interim peace agreement was signed between the US and Iran this month, adding millions of barrels of supply. The deal had stipulated that Iran must allow for free passage of the narrow waterway in return for the US removing its blockade of Iranian ports.

The uptick in prices comes after oil’s steady retreat in June following a dramatic few months in which Brent topped US$125 a barrel. Real-world barrels soared to records, only to subsequently collapse.

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Price forecasts for a worst-case scenario were avoided thanks to slumping demand – particularly in China – as well as pipeline workarounds in the Middle East and massive releases from emergency stockpiles.

The focus had turned to how soon supplies can return to prewar levels, and whether the surplus that was expected to dominate 2026 will return.

In a sign that some key producers are eager to pump more, Iraq stepped up its push to get a higher output quota from the Organization of the Petroleum Exporting Countries on Thursday (Jun 25). The United Arab Emirates left the group earlier this year.

Saudi ships are heading for the major Ras Tanura oil terminal, a sign that the kingdom is set to resume exports from inside the Persian Gulf for the first time since March. Qatar issued its first tender to sell crude since the war began.

Earlier this week, Persian Gulf oil was streaming out of the waterway at the fastest pace since the war began. Goldman Sachs said that it sees Gulf exports now running at almost two-thirds of normal levels, while the pace of visible global inventory declines has slowed.

The US and Iran have both signalled progress though thorny issues remain, including the prospect of Iran seeking to levy a fee for travelling through Hormuz. US President Donald Trump told reporters on Wednesday that tolls would be a red-line issue for US negotiations with Teheran.

Meanwhile, the rising availability of oil has pushed down the price of physical barrels from Angola to the UAE. Brent’s prompt spread, a closely watched metric, flipped into a bearish contango structure on Wednesday for the first time since the war started.

Much of the success in solving the oil supply problem after the war erupted has come at the expense of inventories that will need to be refilled, including in the US. Stockpiles at Cushing, Oklahoma, fell to about 19 million barrels last week, which is below a level considered to be the operational requirement.

A temporary waiver from the US to allow purchases of Iranian oil that’s already been loaded is set to add even more supply. Still, financing and insurance-related obstacles remain, which are likely to limit sales.

“It’s quite amazing the price and narrative turnaround from even where the market was less than two weeks ago,” said Carolyn Kissane, associate dean of New York University’s Center for Global Affairs. “The idea that we are pivoting to seeing more supply with lower demand has really driven the downward price shift.” BLOOMBERG