Oil Hits Month-High as Hormuz Tensions Disrupt Global Energy Flows

Brent crude surged 3.29% to $86.04 a barrel on Tuesday, while U.S. West Texas Intermediate climbed 2.83% to $80.35. The rally marks a sharp reversal in market sentiment, effectively nullifying the June 17 memorandum of understanding intended to de-escalate hostilities between Washington and Tehran. ANZ analyst Soni Kumari noted that traders are rapidly reassessing geopolitical risk premiums as the prospect of a total diplomatic collapse grows.

Strategically, the Strait remains the world’s most vulnerable energy chokepoint, facilitating one-fifth of global oil and liquefied natural gas shipments. Shipping data confirms that traffic through the route has plummeted to a two-month low. Citi analysts warn that the situation may remain volatile through the U.S. midterm elections, even as Iranian Oil Minister Mohsen Paknejad maintains that exports continue without disruption despite the cancellation of sanctions waivers.

Pressure is compounded by expanding regional hostilities, including Houthi missile launches directed at Saudi Arabia. While a 41.3% drop in Chinese crude imports—the lowest level in nearly a decade—provides a slight downward anchor on prices, the market remains fixated on potential infrastructure attacks. Any further escalation in the Gulf threatens to push Brent crude beyond the $90 threshold, complicating inflation outlooks for central banks worldwide.