Oil settles lower but remains near one-month high amid escalating US-Iran tensions
Iran has asked Yemen’s Houthis to be ready to close the Red Sea oil route if the US strikes Iranian power infrastructure
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[NEW YORK] Oil prices settled about 1 per cent lower on Thursday (Jul 16) but remained near their highest level since mid-June as the Iran war escalated, with Teheran asking Yemen’s Houthi movement to be prepared to close the Red Sea oil export route.
Brent crude futures fell US$0.72, or about 0.9 per cent, to settle at US$84.23 a barrel. US West Texas Intermediate futures fell US$0.65, or 0.8 per cent, to close at US$78.95 a barrel. At their session highs, both contracts were up more than 1 per cent.
Thursday’s decline reflects the market losing some steam after prices hit one-month highs earlier this week as traders readjusted their positions, said Ed Hayden-Briffett, oil research analyst for The Officials.
“Investor positioning in the oil market was very short when the situation started to worsen in the Middle East this week, and that seems to have slowed as investors that got burnt in the rally cut their short positions earlier in the week,” Hayden-Briffett said.
On Wednesday, Brent futures settled at their highest since Jun 12, and WTI at the highest since Jun 15.
The fragile truce reached in June has collapsed, disrupting energy flows through the Strait of Hormuz, which handled about a fifth of daily global oil and LNG trade before the war began. Iran has asked Yemen’s Houthis to be ready to close the Red Sea oil route if the US strikes Iranian power infrastructure, three sources told Reuters.
This week, US President Donald Trump repeated oft-stated threats to strike Iranian power plants and bridges.
“With the Strait of Hormuz already closed, this threat raises the serious risk of both of the Middle East’s primary oil export routes being disrupted at the same time,” said Alex Hodes, director of energy market strategy at brokerage StoneX.
About 7.4 million barrels of petroleum transited Bab el-Mandeb per day in June, about 7 per cent of global oil output, according to Kpler data, up from 4.2 million bpd in 2025.
“Simultaneous disruptions affecting Hormuz and Bab el-Mandeb would significantly amplify supply chain stress, increase tanker availability constraints, and raise insurance premiums,” said Wael Makarem, financial markets strategist lead at Exness.
On Wednesday, the US struck Iran’s coastal defences and missile sites after reimposing a naval blockade of its ports. Teheran threatened to shut off more regional energy exports, saying it was engaged in an “existential war” with America.
Iran and the US exchanged intensified fire on Thursday, which kept upward pressure on prices. Weighing on prices was Iran’s release of a US citizen, which could point toward a path to avert the resumption of all-out war.
On the supply side, Iraqi crude loadings more than doubled to average roughly 1.2 million barrels per day in the first half of July, according to Kpler data and a source with direct knowledge of the flows, as exports accelerated following months of restricted shipments. REUTERS
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