SINGAPORE (Realist English). Brent crude oil prices on Monday exceeded the $90 per barrel mark for the first time in a month, driven by the escalating US‑Iran conflict.
On the morning of July 20, Brent futures surged 3% to $90.79, while US WTI rose 2.65% to $84.68. Over the previous week, Brent gained 15.9% — the sharpest weekly jump since April.
By 14:00 Moscow time, Brent was holding above $90.6. Russia’s Urals grade traded around $67 per barrel, still above the level factored into the budget.
Ninth Night of Bombings and Strikes on Tankers
The price surge was a direct consequence of the expanding military campaign. On the night of July 20, the US carried out a ninth consecutive series of airstrikes on Iranian targets, hitting command centres, air defence systems, coastal surveillance stations, missile and drone sites, and communications networks. The objective is to deprive Iran of the ability to attack commercial vessels in the Strait of Hormuz.
Tehran’s response was swift. The Islamic Revolutionary Guard Corps (IRGC) said that two oil tankers were blown up and halted while attempting to pass through the “unsafe” southern route of the strait.
An Iranian military portal also reported that a strike was carried out on a US military base in Kuwait, destroying a substation powering the facility. The IRGC stressed that no oil, gas, or fertilisers will be able to pass through the strait as long as US “hostile actions” continue.
The situation is further complicated by the threat of closing the Bab el‑Mandeb Strait in the Red Sea. According to ING, Iran has instructed Yemen’s Houthis to shut that strait if the US strikes Iranian energy infrastructure. That would block the alternative route that Saudi Arabia has been actively using to bypass the Strait of Hormuz.
Shipping Effectively Halted
The Strait of Hormuz, through which a fifth of the world’s oil normally passes, has been virtually paralysed. According to LSEG, only four vessels transited the strait on Sunday, compared with eight the previous day.
ING analysts note that vessel traffic has essentially ground to a halt: on Monday, only two outbound tankers were recorded, with none inbound.
A vessel on tow caught fire in the Gulf of Oman area, adding to the anxiety of shipping companies. As Citi’s head of energy strategy, Anthony Yuen, put it: “Many shipping companies will hesitate about whether to go through the strait,” and the market is already pricing in a bullish scenario of higher prices due to the escalation.
Markets and Forecasts: Stocks at Five‑Year Lows
The situation is aggravated by the fact that the release of strategic petroleum reserves (SPR), which cushioned the blow earlier in the war, is ending in late July. At the same time, global oil inventories are at their lowest level in five years. Barclays warns that markets are “still too complacent” about the potential implications for stocks.
Speculators have already reacted: over the latest reporting week, they increased their net long position in Brent by 114,752 lots, bringing it to 169,839 lots.
Europe’s gas market is also in turmoil: TTF jumped more than 5%, surpassing €60 per MWh. EU gas storage levels stand at less than 54%, compared with 64% last year and a five‑year average of 69%.
The Gulf conflict shows no signs of abating. As Mansoor Mohi-uddin, chief macro strategist at Bank of Singapore, noted: “The Iranians appear to have dug in on the issue of control over the Strait of Hormuz. In the short term, the risk is that oil prices must go even higher.”
