Market Overview
Oil prices surged more than 25% over a two‑week period as the Middle East conflict intensified, prompting renewed inflation concerns and a sharp rise in U.S. Treasury yields as investors sold government bonds and priced in higher Federal Reserve rate hikes.
Price Movements
At 15:37 ET (19:37 GMT) on Friday, September‑expiring Brent crude futures slipped 4.2% to $96.46 a barrel, while September‑expiring West Texas Intermediate (WTI) contracts fell 3.2% to $89.22 a barrel. Since July 10, Brent has climbed 26.9% and WTI 25.1%.
Shipping Chokepoints
Two strategic maritime routes are under pressure. Kpler data showed Strait of Hormuz traffic dropped to six confirmed crossings, a 60% decline from the previous day. In contrast, Bab el‑Mandeb traffic rose to 49 confirmed crossings, including five sanctioned vessels, 11 shadow‑fleet ships and four dark transits. Iran‑backed Houthi militants in Yemen have launched attacks on Saudi tankers in the Red Sea, heightening risk to Bab el‑Mandeb.
Technical and Supply Commentary
Adam Turnquist, chief technical strategist at LPL Financial, said the oil rebound reflects not only renewed geopolitical anxiety but also improving technical momentum, crowded bearish positioning, pressure on the two critical shipping routes and historically low strategic inventories. He added that weaker Chinese demand and a possible return to negotiations could temper the rally, yet the limited supply cushion suggests oil prices may stay volatile and supported until shipping conditions normalize and inventories recover.
Geopolitical Developments
U.S. Central Command reported its 13th consecutive night of strikes against Iran, while Tehran retaliated by targeting U.S. military bases in Bahrain, Kuwait and Jordan. Mediation efforts appear stalled; the New York Times reported Iran rejected a U.S.–backed cease‑fire proposal delivered by Iraqi Prime Minister Ali al‑Zaidi, citing unresolved control of the Strait of Hormuz. Iraq’s prime minister’s office called the report “entirely unfounded” and unrelated to reality.
Contributors
The article was contributed by Ambar Warrick and Scott Kanowsky.