Oil climbs to one-month high as Iran attacks tankers in Strait of Hormuz

Brent crude climbed to $84.98 a barrel and West Texas Intermediate rose to $79.79 after two Emirati tankers were hit by Iranian cruise missiles in Omani territorial waters, killing one Indian crew member and wounding eight others. The attacks took place in the southern lane of the Strait of Hormuz, the narrow waterway between Oman and Iran that carries one of the world’s biggest energy flows.

Brent had already surged 9.6% in the previous session, its biggest daily gain since May 2020, and the latest move left crude at its highest level since the June 17 memorandum of understanding that ended the war. Tim Waterer, an analyst at KCM Trade, said the competing objectives of both sides had “injected fresh risk into the market” and left “the supply picture highly uncertain.”

The Strait of Hormuz is the narrow waterway between Oman and Iran and carries one of the world’s biggest energy flows. The U.S. Energy Information Administration put oil flow through the strait at 20 million barrels a day in 2024, roughly 20% of global petroleum liquids consumption. The International Energy Agency puts about 25% of the world’s seaborne oil trade through the corridor, with only 3.5 million to 5.5 million barrels a day able to bypass it through pipelines. It is also the main export route for oil from Saudi Arabia, the United Arab Emirates, Kuwait, Qatar, Iraq, Bahrain and Iran.

Higher oil prices typically lift transportation costs across the economy, including the fuel bill at the pump and the cost base for airlines, which eventually feeds into fares. In April, the International Monetary Fund said every 10% rise in crude prices trims GDP growth by about 0.5 percentage point and lifts inflation by 1 percentage point on average.

On July 7, UKMTO recorded a tanker in the Strait of Hormuz struck by an unknown UAV and suffering minor structural damage, while separate incidents on July 6 involved tankers hit by an unidentified projectile and another that caught fire. U.S. Central Command had begun a third consecutive night of strikes against Iran, and Donald Trump said the United States had reinstated its blockade of Iranian shipping and wanted reimbursement for protecting vessels in the strait.