Oil Prices Stay Elevated as Renewed Iran Conflict Disrupts Strait of Hormuz Shipping

Oil prices fell but remained above prewar levels on Thursday, as U.S. and Iranian military forces traded strikes around the Persian Gulf for a second straight day.

· Oil prices remained above pre-war levels despite easing slightly, as renewed US-Iran military strikes increased uncertainty in global energy markets.

· The Strait of Hormuz, a critical global oil transit route, witnessed a sharp decline in shipping activity due to the renewed conflict.

· Ship traffic through the Strait fell from 49 vessels on Tuesday to 25 vessels on Wednesday, compared with over 130 ships per day before the conflict.

· The International Maritime Organization (IMO) advised shipowners to avoid transiting the Strait because of security risks.

· Many vessels used the Iranian shipping corridor, while very few used the Omani route protected by the US Navy.

· Brent crude traded at around US$76 per barrel, compared with US$70 before the conflict.

· West Texas Intermediate (WTI) crude remained around US$72 per barrel, up from US$67 before the war.

· In the United States:

o Average gasoline prices rose to US$3.85 per gallon,

o Diesel prices increased to US$4.81 per gallon.

· Analysts warned that markets had underestimated the risks of renewed regional instability and its impact on oil supply.

· Global financial markets remained volatile:

o The S&P 500 recovered modestly after earlier losses,

o Asian markets were mixed, while European markets rebounded.

· Rising oil prices increased inflation concerns, pushing the US 10-year Treasury yield to nearly 4.6%, its highest level since May.

· The US Federal Reserve indicated it could raise interest rates if inflation remains elevated.

· The International Monetary Fund (IMF) also downgraded its global growth forecast, citing the economic impact of the Iran conflict and higher energy prices.

[ABS News Service/10.07.2026]

And fresh data showed that the number of ships moving through the Strait of Hormuz halved on Wednesday amid renewed fighting, imperiling a nascent recovery in ship traffic.

President Trump said the latest U.S. attacks, which targeted around 90 sites along Iran’s coast, were “retribution” for Iran’s attacks on commercial ships in the strait, a vital waterway for the region’s energy exports. Mohammad Bagher Ghalibaf, Iran’s top negotiator in peace talks, said that the strait “will open only under Iranian arrangements, not American threats.”

The International Maritime Organization, a United Nations agency, recently urged shipowners and operators to avoid sending their ships through the strait, which had only recently begun to see an uptick in traffic after a cease-fire agreement between the United States and Iran was signed last month. Mr. Trump said on Wednesday that he thought the three-week-old agreement was “over,” although he later suggested that Iran was open to making a deal. Iran has said nothing about new negotiations.

A recovery in shipping in the Strait of Hormuz looks shaky.

· On Wednesday, just 25 ships passed through the strait in both directions, according to Kpler, a maritime data company, down from 49 the day before. That figure is more than during the peak of the war, when only a handful of vessels braved the narrow waterway between Iran and Oman each day, but significantly down from prewar levels of more than 130 ships per day.

· Many of the vessels that went through the strait this week used the Iranian corridor, which the authorities in Tehran have insisted is the only viable route. The middle of the strait is considered dangerous by shipowners because of the risk of mines laid by Iran’s military. Only one ship that transited on Wednesday took the Omani route, through which the U.S. Navy is providing guidance. Overall volumes of traffic were difficult to assess because many ships have turned off their location tracking devices.

· “It’s in neither side’s interests for traffic through the Strait of Hormuz to grind to a complete standstill for a sustained period,” said Ben May, the director of global macro research at Oxford Economics. It was too soon to say whether turmoil in the strait would continue to push up oil prices, he added, “as it’s probable the cease-fire continues to be on and off.”

Oil prices remain above prewar levels.

· Brent crude oil, the international benchmark, slid to around $76 per barrel on Thursday. Before this week’s outbreak of fighting, prices had slipped to $70 a barrel, dipping slightly below their prewar level.

· West Texas Intermediate crude, the U.S. oil benchmark, eased slightly to around $72 a barrel. This grade of crude traded at $67 per barrel before the war.

· Gasoline prices don’t move in lock step with crude oil. The U.S. national average price of gas jumped 5 cents to $3.85 a gallon on Thursday, according to the AAA motor club. That is 29 percent higher than it was on the eve of the war in late February. The price of diesel rose 4 cents to $4.81 a gallon.

· “The past few days’ price action makes one thing clear: markets were far too relaxed about the risks surrounding the deal — and far too bullish on how quickly regional supply could rebound,” Warren Patterson and Ewa Manthey, commodity strategists at ING, wrote in a research report.

Stocks and bonds fluctuate as investors fret about inflation.

· The S&P 500 was roughly 0.8 percent higher at the close of trading on Thursday. The benchmark U.S. stock index closed with a small loss on Wednesday, after a choppy day in which the VIX volatility index, known as Wall Street’s “fear gauge,” hit its highest level in two weeks.

· Stocks in Asia were mixed, with Japan and South Korea posting gains but Hong Kong trading lower. Stocks in Europe were up, regaining some of the ground lost after a deep decline the day before.

· The recent rise in oil prices has stoked unease among bond investors about inflation, with the 10-year U.S. Treasury yield jumping to nearly 4.6 percent, its highest level since May. (Bond yields move inversely to prices.) Officials at the Federal Reserve have signaled support for raising interest rates if inflation does not decelerate, according to the minutes of their most recent meeting.

· Investors are also getting to grips with the economic effects of the war in Iran. On Wednesday, the International Monetary Fund downgraded its forecast for global economic growth this year.