Hormuz Disruptions Drive Oil Prices Volatility

Oil prices have been volatile in recent weeks due to concerns over disruptions to crude flows through the Strait of Hormuz. Brent crude futures rose 1.27% to $105.64 a barrel by September 28, while US West Texas Intermediate (WTI) crude increased 0.76% to $93.11.

The Strait of Hormuz is a critical energy chokepoint, with about 20% of the world's daily crude oil and liquefied natural gas supply moving through it before the conflict. However, flows remain well below normal, averaging only 7.6 million barrels per day in August, down from pre-war levels.

Some lost supply has been offset by alternative routes, such as Saudi Arabia's East-West Pipeline, which can reroute around 4 million barrels per day. However, these alternatives are vulnerable to disruption, as seen when a drone attack forced the pipeline to shut down earlier in September.