The attack on two ships near Hormuz raises oil prices economy

Oil prices rose on Tuesday, after reports that two ships were damaged near the Strait of Hormuz, bringing the geopolitical risk premium back to the market amid fears of disruption to navigation in one of the world’s most important energy corridors.

At the time of writing these lines, Brent crude futures rose to $72.78 per barrel, an increase of 1.10%, after touching a range between $71.04 and $73.30 during the session, while US West Texas Intermediate crude rose to $69.31 per barrel, an increase of 1.11%.

Reuters quoted Saxo Bank analyst Ole Hansen as saying that targeting a ship in the Strait of Hormuz “restores part of the geopolitical risk premium to prices,” adding that any new escalation could make the $75 level “the next natural level that should be monitored before $80.”

Axios quoted an American official confirming that two ships were severely damaged as a result of an Iranian missile attack. The American official said that the Iranian Revolutionary Guard fired at least two missiles towards commercial ships that were crossing the Strait of Hormuz, which led to the two ships being hit.

In this context, the Qatari Foreign Ministry denounced the targeting of a Qatari tanker while it was crossing near the Strait of Hormuz, and said that the attack was “an unacceptable attack on the security and safety of international navigation.”

Qatari Foreign Ministry spokesman Majid Al-Ansari said – in a post on the X platform – that targeting the Qatari tanker “Al-Rakyat” is “an unacceptable attack on the security and safety of international navigation, and the security of global energy supplies.”

Washington and Tehran talks

The developments come at a time when investors are monitoring the course of the talks between the United States and Iran, after the Iranian Foreign Minister said today that the talks aimed at reaching a final agreement between Tehran and Washington will not be held as long as the American threats continue, following US President Donald Trump’s threat that the United States will either reach an agreement with Iran or “will finish the job.”

The Strait of Hormuz is gaining special sensitivity in energy markets, as the US Energy Information Administration indicates that flows through it in 2024 and the first quarter of 2025 constituted more than a quarter of global seaborne oil trade, and about a fifth of the world’s consumption of oil and petroleum products, in addition to about a fifth of global liquefied natural gas trade.

The US administration says that Saudi Arabia transports larger quantities of crude and condensates through the Strait than any other country, as its exports accounted for 38% of crude flows through Hormuz in 2024, equivalent to 5.5 million barrels per day.

Gulf countries are seeking to reduce their exposure to any potential disturbance in the Strait, as Saudi Arabia and the UAE have pipeline infrastructure that can partially bypass Hormuz, and the US Energy Information Administration estimates that about 2.6 million barrels per day of energy available in Saudi and Emirati pipelines can be used to circumvent the Strait in the event of a supply disruption.

In this context, Reuters reported, citing 5 sources described as informed, that Saudi Arabia is considering expanding the capacity of the crude oil pipeline extending to the Red Sea coast in the west of the Kingdom, which may enable it and perhaps neighboring countries to transport larger quantities of oil without the need to cross the Strait of Hormuz.

Supply suppresses gains

But the rise in prices remained relatively limited due to expectations of expanding supply. Société Générale expects the oil market to shift from deficit to surplus by late 2026 and through 2027, with supply growth outpacing slower demand growth.

The bank reduced its oil price forecast to $75 per barrel in the last quarter of 2026, compared to a previous estimate of $83. It also reduced its average forecast for 2027 to $73 per barrel from $79, suggesting that stocks will rise gradually while volatility remains high.