Brent Prices Near $90 as US-Iran Standoff and Shipping Disruptions Bite

Global crude oil markets are facing significant challenges due to the ongoing US-Iran standoff and disruptions in shipping routes, particularly around the Strait of Hormuz. The market is pricing a wider energy shock driven by factors such as disrupted shipping, shrinking inventories, weaker refining activity, and rising pressure on consumers.

The uncertainty remains high with attacks linked to Iran-backed groups in various regions keeping shipping risks elevated. Shipping costs are averaging $10 per barrel, and several vessels have been hit by projectiles near the Strait of Hormuz, making insurers, traders, and shipowners more cautious.

Emergency stock releases and floating inventories have helped absorb the supply shock so far, but this cushion is thinning fast. OECD reserves have declined over the past six months, while floating storage has also fallen, leaving the market with less protection if disruptions continue into September.