Oil prices drop over $1 amid Hormuz tensions

Global oil prices fell by more than $1 per barrel as investors weighed growing threats to energy supplies through the Strait of Hormuz against US efforts to ease restrictions on shipping and reduce transportation costs.

Brent crude futures dropped $1.39, or 1.31 per cent, to $104.67 per barrel. US West Texas Intermediate (WTI) crude fell $1.02, or 1.07 per cent, to $94.07 per barrel.

The decline came as markets assessed the potential impact of attacks on commercial vessels near the Strait of Hormuz, a vital route for global oil shipments. Investors are also monitoring US efforts to relax restrictions on vessels involved in oil transportation to help reduce shipping costs and ease pressure on energy supplies.

Oil prices had climbed during the previous trading session after reports of an attack on Saudi Aramco’s headquarters by Yemen’s Houthi rebels and Iran’s announcement of a new strategy to target vessels in the Strait of Hormuz. These developments pushed WTI crude to its highest level in three weeks.

Tensions around the strategic waterway have intensified in recent days. On Wednesday, a container ship and a dry bulk carrier reportedly sank after being struck by missiles or other weapons in separate incidents near the Strait of Hormuz. The incidents have raised fresh concerns about the safety of commercial shipping and the potential for further disruptions to global trade.

Attacks around the strait have increased over the past 10 days, adding uncertainty to energy markets. Any prolonged disruption to shipping could affect crude oil exports, increase freight and insurance costs, and put further pressure on fuel prices worldwide.

Iran has said it is intensifying its attacks in response to a US blockade of Iranian ports and tighter sanctions imposed last month. The confrontation has heightened concerns that the conflict could further disrupt oil supplies from the region.

Despite the recent decline, crude prices remain sensitive to developments in the Middle East. Investors are closely watching shipping activity, military actions and diplomatic efforts to assess whether supplies can continue moving through the Strait of Hormuz without further disruption.