Oil Prices Rise Amid Tensions in Strait of Hormuz Following Iranian Missile Attacks

Oil prices experienced a modest increase on Tuesday as traders shifted focus from a temporary easing of Middle East geopolitical tensions to global supply growth and future demand forecasts. Brent crude rose by 1.2% to $72.84 per barrel, while U.S. WTI crude increased by 1.1% to $69.29 per barrel. These gains followed Monday's declines that had brought prices back to pre-conflict levels with Iran.

U.S. President Donald Trump reiterated a firm stance on Iran, stating the U.S. would either reach an agreement or "finish the job," renewing threats of military action. This came amid Iranian defiance following the funeral of former Supreme Leader Ayatollah Ali Khamenei. Investors are closely monitoring talks between Washington and Tehran regarding shipping security in the Strait of Hormuz and the pace of Persian Gulf oil export recovery.

Concerns escalated after Iran's Revolutionary Guards fired at least two missiles at commercial vessels passing through the Strait overnight. According to Axios, citing two U.S. officials, the ships sustained significant damage but no casualties were reported. Shipping data showed large Japanese-owned tankers carrying Saudi crude oil heading toward the Strait to exit the Gulf, joining other vessels that had been previously stuck.

Despite the recent surge in Strait activity, ANZ analysts noted in a special memo that oil flow recovery remains slower than expected. Initial increases in tanker transits have stalled, with single-digit daily crossings and no sustained rebound. While the temporary U.S.-Iran agreement reduced immediate geopolitical risks, shipping operators remain cautious, limiting crude export recovery rates.

Meanwhile, the United Arab Emirates raised its crude oil output above 3.8 million barrels per day in June, the highest since April 2020 and above pre-Iran conflict levels, following its exit from OPEC production quotas in May. Additionally, OPEC+ agreed to further increase production targets by 188,000 barrels per day starting in August, adding to prior increases for June and July.

Reflecting intensified supply competition in Asian markets, Saudi Aramco announced a sharp cut in the official selling price of its flagship Arab Light crude for August. The price was set $1.50 below the Oman/Dubai average, marking an $11 per barrel drop from the previous month, the steepest decline in over two decades.