Oil prices have surged significantly as Brent crude traded above $89 per barrel and West Texas Intermediate (WTI) hovered near $84 per barrel, with the global benchmark gaining more than 23% in July - capping the strongest monthly performance since March. According to Reuters, Brent crude futures rose $1.48, or 1.63% to $92.22 per barrel following renewed U.S. military action against Iran. The latest gains followed a sharp rally in the previous session, when both benchmark contracts surged around 7-8% after President Trump warned Iran it would be hit "very hard" following an Iranian missile strike on a U.S. military base in Jordan. The surge came as U.S. and Saudi Arabia launched strikes on Iran-backed groups in Iraq, marking the first time Saudi Arabia had publicly joined U.S. air strikes, with the action described as a response to drone attacks launched from Iraq against Saudi oil infrastructure.
Oil prices have staged a dramatic recovery after the ceasefire between the US and Iran collapsed, with Brent crude surging 9.6% on July 13 to $87 per barrel and touching $87.20 per barrel in recent trading. According to The Edge Malaysia Weekly, this rebound came after prices had plunged approximately 5% on Tuesday to a two-week low amid hopes that U.S.-Iran conflict efforts would resume. The collapse began when Iranian missiles struck commercial vessels in the Strait of Hormuz in early July, prompting the US to launch successive waves of strikes on Iranian coastal military assets and revoke a temporary waiver allowing Iranian oil sales. Iran retaliated with drone and missile attacks on US bases in Kuwait and Bahrain, and struck two UAE supertankers transiting the strait, killing one crew member. Tehran declared the waterway closed 'until further notice' and Washington reimposed a naval blockade of Iranian ports.
U.S. crude inventories have dropped to critically low levels, with crude stockpiles falling by 7.2 million barrels to 404.5 million barrels last week, according to the Energy Information Administration reported by The Economic Times. This decline was significantly higher than analysts' expectations of a 1.3-million-barrel draw, with U.S. crude inventories falling to a multi-year low. The inventory data was cited from the American Petroleum Institute and is expected to be confirmed by official Energy Information Administration data later on Wednesday. Total US crude stocks, including the SPR, stood at roughly 726 million barrels for the week ended July 10, the lowest since May 1984, while commercial inventories, at roughly 410 million, are the lowest since 2018. As per DBS Research, OECD inventories are at their lowest since 1992, with global import cover approaching 70 days — near what many analysts consider a stress threshold of around 80 days.
The benchmark 3-2-1 spread on Brent crude — the margin from refining three barrels of crude into two of gasoline and one of distillates — surged to a record high of nearly $55 per barrel, roughly 3.6 times its January low, according to The Edge Malaysia Weekly. This reflects a shortage not of crude, but of the heavier Middle Eastern grades that yield more diesel and jet fuel. Singapore jet fuel prices have climbed roughly 140% since the conflict began, with Shuchart noting that if crude had appreciated by the same magnitude as jet fuel, Brent would be trading closer to $175. The Dated-to-Frontline (DFL) spread between Brent front-month futures and Dated Brent has remained relatively narrow at premiums of under $2 per barrel, though it has climbed steadily from negative territory since Trump declared the ceasefire to be over.
Attention remains focused on shipping activity through the Strait of Hormuz, a critical route for global oil and liquefied natural gas exports, with mixed signals emerging about potential disruptions. According to Reuters, Iran's Fars news agency said a Qatari LNG tanker had passed through the Iran-designated shipping route in the Strait of Hormuz with Tehran's permission. The vessel, identified as the Al Areesh, had loaded its cargo at Qatar's Ras Laffan terminal between July 4 and July 6 before sailing through the strait overnight on July 29, according to shipping data from Kpler and LSEG. However, another development added to concerns over oil supply logistics, as Reuters reported citing Russian news agency Interfax that the Caspian Pipeline Consortium had suspended oil loadings after a drone attack on a tanker. Meanwhile, Saudi Arabia is also seeking to shore up maritime security, holding discussions with representatives from 43 countries to form an alliance aimed at protecting navigation in and around the Red Sea after Iran-backed Houthi rebels imposed a blockade on the kingdom last week. Houthi leader Abdulmalik al-Houthi warned that any broader Saudi military escalation would be met with a stronger response, adding to concerns over attacks on oil infrastructure and shipping lanes.
