Market Move

On Wednesday, Brent crude futures for September delivery surged 3.6% to $94.32 a barrel, briefly climbing above $95 – the first time the benchmark has crossed that level since June 11. The price jump represented a 29% rise for Brent in the month, while U.S. West Texas Intermediate (WTI) for September gained 3.3% to $87.14, up nearly 26% month‑to‑date.

Geopolitical Trigger

President Donald Trump posted on Truth Social that the United States will bomb and destroy one Iranian bridge or power plant – including those in or near Tehran – each time Iran attacks a ship in the Strait of Hormuz with missiles, rockets, drones or any other weapon. Iran’s Tasnim News Agency, citing a military source, warned it would target regional infrastructure and energy facilities with American interests if any bridges or power plants were struck. Foreign Minister Abbas Araghchi added that any aggression would be met with a "powerful and decisive response."

Iranian Counter‑Narrative

Iranian state media claimed the United States had already targeted bridges during an eleven‑day bombardment campaign. Parliamentary speaker and chief negotiator Mohammad Bagher Ghalibaf stated the Strait would not return to pre‑war conditions, emphasizing that without security, no oil would be sold and no infrastructure would be safe.

Shipping Chokepoint Disruptions

Kpler data showed a sharp decline in vessel movements on Tuesday: crossings of the Strait of Hormuz fell 31% from the previous day to nine vessels, while traffic through the Bab el‑Mandeb Strait dropped 34% to 29 vessels. Analysts at ING noted that Houthi attacks could force tankers to reroute via the Suez Canal, adding significant time and expense to voyages to Asia. Four confirmed vessel U‑turns near the Gulf of Aden indicated heightened caution among operators. The shipping tracker warned that continued uncertainty across both chokepoints could reshape routing decisions, increase freight costs and sustain higher geopolitical risk premiums for energy markets.

US Inventory Data

The U.S. Energy Information Administration (EIA) reported that commercial crude oil inventories, excluding the Strategic Petroleum Reserve (SPR), rose by 2 million barrels in the week ending July 17, contrary to expectations of a 2 million‑barrel draw. However, total SPR inventories fell to 311.4 million barrels, the lowest level since March 1983. This decline reflects the Trump administration’s agreement to release 172 million barrels from the SPR over four months to help cap oil prices. At the Cushing, Oklahoma hub, crude stocks fell to 19.4 million barrels, effectively scraping the tank bottom.

Diplomatic Outlook

Media reports indicated that Iranian Interior Minister Eskandar Momeni met Pakistani mediators, and a senior Iranian official said Iran had received a 10‑day cease‑fire proposal aimed at reviving the June framework deal. U.S. Secretary of State Marco Rubio, speaking at the ASEAN summit in the Philippines, said the United States remains open to constructive negotiations but does not consider Iran serious about talks, and will continue to protect shipping while working to degrade Iran’s ability to target global shipping.

Analyst Perspective

ING analysts argued that Brent, trading just above $91 a barrel, appeared undervalued given the compounded disruptions from the Persian Gulf, potential Red Sea routing, and Black Sea developments, especially if the tensions persist into August.