Market Move
On 21 July 2026, Brent crude futures for September advanced 2.5% to settle at $91.41 a barrel, while U.S. West Texas Intermediate (WTI) futures for the same month rose 2.5% to $84.54 a barrel.
Geopolitical backdrop
The rally follows the United States completing a tenth consecutive day of air strikes against Iran. Iran retaliated by attacking a tanker in the Strait of Hormuz and targeting U.S. military bases in the region. U.S. Secretary of War Pete Hegseth told reporters that Iran had been given every opportunity to negotiate and warned that the United States would hit Iranian sites "ten times harder" if commercial shipping continued to be targeted.
President Donald Trump added that Iran "desperately" wants to meet, but the United States has no interest until Iran is ready for a "meaningful" dialogue and will strike any site linked to a nuclear program.
Diplomatic efforts
Despite the escalation, mediators are still pursuing a diplomatic solution. Pakistani Prime Minister Shehbaz Sharif and Iranian Interior Minister Eskandar Momeni met in Islamabad, while U.S. Secretary of State Marco Rubio indicated that the United States remains open to reviving negotiations under the interim peace deal signed in mid‑June.
Shipping and supply concerns
The fighting has made vessels in the Strait of Hormuz cautious, curtailing transit through this vital chokepoint and stoking supply worries. Adding to the tension, Iran‑backed Houthi rebels in Yemen announced a planned blockade of Saudi ships, raising fears for traffic through the Bab al‑Mandeb Strait, which handles roughly 12% of global trade and a significant share of oil shipments. Media reports confirmed that at least two Saudi tankers diverted their routes after receiving Houthi warnings.
Potential trade‑flow shifts
Kpler, a shipping analytics firm, warned that the diversions could signal broader changes in tanker trade routes. If Saudi crude exports from Yanbu to Asia increasingly avoid the Bab al‑Mandeb, cargoes would likely be rerouted via the Suez Canal or around the Cape of Good Hope, potentially tripling tonne‑mile demand. Suezdraft restrictions would favour Suezmax vessels, while many Very Large Crude Carriers (VLCCs) would need to sail partially loaded. Longer voyages would tighten tanker availability, support freight‑market rates, and raise delivered costs for Asian refiners.
U.S. response to Red Sea threats
President Trump stated that a Red Sea blockade had not yet occurred, but warned that if it materialised the United States would "take care of it."
Publication details
The article, authored by Anuron Mitra and contributed to by Ayushman Ojha and Scott Kanowsky, was published on 21 July 2026 at 06:18 am and updated on 22 July 2026 at 02:44 am.