Oil Prices Hold Near $95 as US-Iran Escalation Revives Hormuz Supply Concerns

Oil prices extended their strong gains on Wednesday as renewed strikes between the US and Iran heightened fears of further supply disruptions across the Middle East. Growing threats to shipping through the Strait of Hormuz, where traffic is already significantly below normal levels, have kept a substantial geopolitical risk premium in crude prices.

At the time of writing, November Brent crude was trading at around $94.81/bbl, up 16 cents from the previous settlement. October WTI stood at approximately $90.14/bbl, down 8 cents.

Brent Gains Nearly 5% in Tuesday’s Session

The latest strength followed a sharp rally on Tuesday. November Brent settled $4.16 higher at $94.65/bbl, while October WTI climbed $4.46 to $90.22/bbl. These were Brent’s strongest one-day gains since July 24 and WTI’s largest since July 23.

The rally continued into early Asian trading on Wednesday, with Brent briefly moving above $95/bbl after the US said it had conducted several overnight air strikes against targets in Iran. Tehran responded with missile and drone attacks on US military facilities in the region, marking the most significant escalation between the two sides in several weeks.

The latest developments came after tensions intensified over the weekend and two tankers departing the Strait of Hormuz were attacked on Monday, once again placing oil supply security at the center of market concerns.

Iran Signals Further Restrictions on Hormuz Traffic

Following the US strikes, Iran’s Islamic Revolutionary Guard Corps (IRGC) warned that the attacks could result in additional restrictions on shipping through the Strait of Hormuz. Before the conflict, the waterway carried roughly one-fifth of global oil consumption, making it a critical source of uncertainty for energy markets.

Shipping movements remain heavily restricted. Preliminary Kpler data showed just four commodity vessels passing through Hormuz on Tuesday, compared with 10 on Monday and a 10-day average of about 13 vessels. Of Tuesday’s crossings, three vessels were outbound and only one was entering the strait.

Traffic through the Bab el-Mandeb waterway was also below recent levels, with 18 commodity vessels crossing on Tuesday against a 10-day average of approximately 24.

Despite the lower shipping activity, US Energy Secretary Chris Wright said around 17 million barrels of oil moved through Hormuz on Monday, describing it as the highest volume recorded since the US-Israeli war with Iran began disrupting regional flows.

Iranian Oil Exports Remain Severely Disrupted

The escalation comes as Iran’s crude exports through Hormuz have effectively come to a standstill. Shipping data cited by Reuters indicated that no Iranian crude cargo has successfully travelled through the strait to China since the US reinstated its blockade on July 14.

Iran loaded only around 220,000–255,000 bpd of crude and condensate in August, according to Kpler and Vortexa estimates. This compares with approximately 740,000 bpd in July and around 2 million bpd in March.

With exports restricted, Iran has increasingly relied on crude stored aboard tankers outside the Gulf to maintain supplies to China, its main remaining oil buyer. At the same time, crude inventories continue to build inside the strait. TankerTrackers.com estimated that 29 tankers carrying around 36.1 million barrels remained stranded in the waterway.

Potential Venezuelan Supply Growth Could Weigh on Prices

Venezuela could provide a longer-term source of additional supply, although any increase is unlikely to be immediate. US Energy Secretary Wright said Venezuelan production, currently estimated at 1.1–1.2 million bpd, could more than double over the coming years if US and international energy companies move ahead with new investment agreements.

Companies including Chevron, Eni, ONGC, GeoPark and GE Vernova are expected to sign agreements related to Venezuelan energy projects this week. Washington has also supported a separate agreement giving North American Blue Energy Partners long-term access to 17 Venezuelan oilfields, which are estimated to contain around 65 billion barrels of reserves.

A significant rise in Venezuelan output could eventually put downward pressure on global crude prices. For now, however, the oil market remains focused on the immediate threat of additional Middle East supply disruptions and uncertainty surrounding the return of normal tanker traffic through the Strait of Hormuz.

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