SINGAPORE – Oil climbed as a tanker was reported to have been hit in the Strait of Hormuz, highlighting continued risks to traffic in the waterway.
Brent crude rose 0.4 per cent to US$72.27 a barrel as at 8.27am Singapore time, while US West Texas Intermediate also gained 0.4 per cent to US$68.85.
A tanker traveling south reported being hit by a projectile on the port side about eight nautical miles east of Limah, Oman, causing a fire, UK Maritime Trade Operations said. No casualties were reported.
The strait – which links Persian Gulf producers to global markets – has partially reopened following its near-total closure triggered by the US-Iran war, with a convoy of at least eight Japan-linked ships among recent transits. Still, while traffic is recovering, movements remain below pre-conflict levels.
Oil sank 30per cent in the second quarter as Washington and Tehran agreed to an interim peace deal, easing concerns over supply disruptions from the Middle East. Global benchmark Brent has fully erased the war premium that had built up in recent months, with some leading banks including Goldman Sachs and Morgan Stanley now warning there’s a risk a glut will return.
On July 6, Saudi Aramco said it will lower Arab Light oil to Asia for August by US$11 a barrel to US$1.50 below a regional benchmark. The last two times it sold the grade at a discount were during price wars in 2020 and 2015.
The move by Riyadh follows a decision at the weekend by OPEC+ members including Saudi Arabia to raise output quotas for August, adding to the prospect of more supply. While those extra barrels remain theoretical, the decision signals a desire to raise production as conditions normalize.
“We have a US$60 target on oil over the next month,” said Jay Hatfield, chief executive officer at Infrastructure Capital Management. “Saudi posted price cuts normally reflect changes in market prices. We had already assumed that OPEC would produce at maximum production to refill coffers.”
Further insight into market conditions will come later on July 7 when the US Energy Information Administration issues its Short-Term Energy Outlook. In June, the agency raised its 2027 forecast for US crude production by 220,000 barrels a day to 13.83 million after prices had rallied during the war. BLOOMBERG
