Crude oil prices jumped sharply on Thursday following renewed U.S. military strikes on Iran. Brent crude soared above $92 per barrel, closing at $92.22 after a $1.48 increase. West Texas Intermediate (WTI) climbed 43 cents to $84.89. These gains came after both benchmarks had already surged between 7% and 8% on Wednesday.
The fresh U.S. attacks reignited geopolitical tensions, injecting a risk premium into oil prices amid fears that energy production or shipping routes could be disrupted. The conflict escalation triggered traders to price in potential supply constraints, pushing prices higher.
Inventories Shrink While Shipping Routes Stay Active
Adding fuel to the rally, U.S. crude inventories dropped by 7.2 million barrels in the week ending July 24, according to the Energy Information Administration. This decline far exceeded analysts’ expectations of a 1.3 million-barrel drawdown and pushed stockpiles to their lowest since 2018, tightening physical supply and supporting the market.
Despite the tension, shipping lanes remained open. MarineTraffic reported 53 vessel transits through the Strait of Hormuz and Bab el-Mandeb on July 28, with Hormuz crossings jumping 50% from the day before to 12, while Bab el-Mandeb saw a 5% increase to 41 crossings. Still, some shipping routes were unusual and visibility for vessels remained limited, keeping exporters cautious about potential disruptions.
In a notable development, a Qatari LNG tanker passed through the Iran-approved route in the Strait of Hormuz, signaling some level of coordination amid the hostilities. Meanwhile, the Caspian Pipeline Consortium halted oil shipments after a drone attack targeted a tanker, underscoring the fragility of regional energy infrastructure.
Technical charts reveal crude prices have rebounded strongly from their lows earlier this month, fueled by the combination of geopolitical risks and diminishing inventory buffers.
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