LAHORE: Rising military tension between the United States and Iran in the sixth month of the war in the Middle East has begun to disturb global energy markets once again, with crude oil prices climbing more than two per cent in international trading on Monday.
Brent crude rose by $2.51, or 2.85 per cent, to $90.61 a barrel, while US benchmark West Texas Intermediate gained $2.13, or 2.55 per cent, to $85.53 a barrel.
The principal cause of the increase was fresh military exchange between the United States and Iran near the Strait of Hormuz. US forces on Sunday struck two launchers on the Iranian island of Larak, situated in the strait. The action is being described as the first known US military operation against Iran since the end of July.
US Central Command spokesperson Navy Captain Tim Hawkins confirmed the strike, stating that Islamic Revolutionary Guard Corps forces had been observed preparing to launch rockets carrying sea mines into the Strait of Hormuz.
In response to the American strike, Iran’s Revolutionary Guards claimed to have targeted two US air bases in Jordan with ballistic missiles. Iranian media confirmed the retaliatory action, citing the Revolutionary Guards.
Market analyst Tony Sycamore said tension in the region appears to be escalating once again, though it is not currently possible to say clearly how long the situation will persist. In his assessment, the present tension could continue anywhere from a few days to several weeks.
Technical analysis also points to the possibility of further increases. According to analysts, if regional tension intensifies and WTI crude crosses the resistance level of $85.80 to $85.90 a barrel, the price could first reach last week’s high of $87.69, after which the July level of $93.50 a barrel could be seen again.
Efforts towards a ceasefire and an end to the conflict are currently deadlocked. Mediating countries are attempting on one hand to advance negotiations between the parties, and on the other to take steps towards reopening the Strait of Hormuz. Before the war began, approximately 20 per cent of the world’s oil shipments passed through this critical waterway.
US Treasury Secretary Scott Bessent told Reuters on Sunday that Washington is likely to impose new secondary sanctions on Iran each week, with the objective of completely isolating Iran from the dollar-based international financial system.
Although Brent and WTI prices were trending towards a modest overall decline at the close of August — both benchmarks fell more than four per cent last week — the fresh military tension in the Strait of Hormuz has again heightened fears of disruption to global oil supply.
According to ANZ analysts, concerns of large-scale supply disruption had eased somewhat as shipments through the Strait of Hormuz increased marginally. However, by the weekend the number of large commercial vessels passing through the waterway had fallen to just five per day. Analysts say the decline in shipping traffic reflects a cautious strategy adopted by shipping companies in view of the risk of possible attacks.
According to United Kingdom Maritime Trade Operations, a tanker transiting the Strait of Hormuz was struck by a projectile on Saturday. The incident has further deepened concerns over the security of commercial shipping in the critical waterway and over global oil supply.
Separately, US President Donald Trump said on Sunday that oil obtained under a recent agreement with Venezuela will be used to refill America’s Strategic Petroleum Reserve. According to US officials, the country’s emergency oil stockpile has fallen to near its lowest level in about 44 years, making restoration of the reserve a Washington priority.
The transmission mechanism is direct and rapid. Pakistan imports the overwhelming majority of its crude and refined product, and a substantial share of its LNG, through Gulf routes. A sustained move in Brent feeds into the Oil and Gas Regulatory Authority’s fortnightly price computation, into the fuel-cost adjustment on electricity bills, and into the import bill that determines pressure on the rupee and on foreign exchange reserves.
The shipping figure is the number to watch, not the price. Five large commercial transits per day, against a pre-war average in the low hundreds, indicates that the strait is functionally constrained regardless of what the headline price does on any given session. As long as that figure stays depressed, every downward move in crude is a pause rather than a trend — and Pakistan’s fuel-import planning should be built on that assumption.
-with additional inputs from AFP, Reuters, and News Desk
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