Hormuz Tensions Send Oil Prices on Wild Ride

Oil prices saw a significant fluctuation on September 2, as Brent crude hit $94.28 and West Texas Intermediate (WTI) reached $89.58, before both gave back $2.44 and $2.59 respectively in the overnight session.

The price volatility is largely due to the ongoing tensions in the Strait of Hormuz, where two oil tankers were disabled by naval mines after ignoring warnings to take an alternate route. The incident has raised concerns about the safety of shipping through the waterway, with insurance markets repricing the risk premium in Brent crude.

Despite a statement from Treasury Secretary Scott Bessent that 17 million barrels of crude passed through Hormuz on Monday, estimates put the average daily flow at just 4.9 million barrels per day for the second quarter of 2026, down from 21.6 million barrels per day in the fourth quarter of 2025.

Producers such as Saudi Arabia, the UAE, Kuwait, and Iraq are still managing to ship barrels through the waterway, but at a high cost and with intermittent supply. This has led to a significant shut-in of production, averaging 5.5 million barrels per day in July, which is roughly 5% of global liquids supply.