Oil climbs 1% as Oman spill and Gulf attacks tighten supply

Brent crude rose above $88 a barrel as a spreading oil spill off Oman and fresh vessel attacks in the Gulf of Oman and Red Sea deepened supply concerns.

Brent crude for October delivery climbed 1.01 percent to $88.09 a barrel Thursday, while West Texas Intermediate advanced 1.15 percent to $82.31, as a spreading oil spill off Oman and fresh vessel attacks in the Gulf of Oman and Red Sea deepened worries over supply disruptions.

"The lack of clarity over the possibility of a full reopening of the waterway could leave oil prices exposed to the upside at a time when the market remains tight," said Christopher Tahir, senior market strategist at Exness.

The tanker that ran aground June 30 was carrying an estimated 800,000 barrels of Russian oil and is under international sanctions, according to Reuters. The spill is leaking near a nature reserve home to Arabian Sea humpback whales and Socotra cormorants. The International Energy Agency said global oil demand is set to fall further than expected this year as the closure of the Strait of Hormuz deepens, with supply remaining 6.3 million barrels a day lower year-on-year in July.

The over five-month-old war continues to disrupt energy flows through two of the world's most important maritime chokepoints. The US Energy Information Administration has warned some Middle Eastern producers may struggle to restore output to pre-conflict levels even by the end of 2027, suggesting supply effects could persist well beyond any ceasefire.

Attacks Spread Across Two Shipping Lanes

Iran-backed Houthi rebels killed six people in an attack on a cargo ship in the Bab el-Mandeb Strait on Tuesday, the first reported fatalities from attacks on Red Sea shipping in more than a year. Hours later, US forces said they fired missiles at a container ship that allegedly tried to break Washington's blockade of Iranian ports in the Gulf of Oman.

The incidents show the growing impact of the nearly six-month-old war on two key global shipping routes, even as diplomatic efforts toward reopening the Strait of Hormuz show signs of progress. Vessel transit through the waterway has fallen significantly following the latest incidents, adding another layer of risk to an already tight market. The last time shipping through Hormuz was disrupted on this scale, freight and insurance costs on Gulf cargoes jumped sharply within weeks, a pattern traders are watching closely again.

Diplomacy Stalls as Both Sides Harden

Iran's top security official, Mohsen Rezaei, said Tuesday the Strait of Hormuz would remain closed unless Washington accepted Tehran's conditions for ending the war, including the release of frozen assets and an end to conflicts across the region. The position came a day after President Donald Trump demanded Iran pay compensation for people killed in wars, attacks and protests over the past 50 years.

Trump maintained the US was in a strong position, saying "We totally control the Strait of Hormuz," and warned Iran could face further military action if it took steps against the US. For oil markets, the combination of stalled diplomacy and renewed attacks on shipping is keeping supply concerns elevated.

With supply running 6.3 million barrels a day below year-ago levels, any additional setback to shipping through Hormuz or the Bab el-Mandeb could push Brent toward $90 and beyond, raising energy costs for importers and adding to inflationary pressure across the global economy.

This article is for informational purposes only and does not constitute investment advice.