Iran Blocks Strait of Hormuz, Crude Prices Rise Amid Ongoing Disruptions

Crude oil prices rose on Friday after reports of Iran attacking two Abu Dhabi oil vessels transiting the Strait of Hormuz. The attacks suggested that Iran intends to continue disrupting vessel traffic in the strait, giving them control over it and potentially allowing them to collect tolls.

The US has imposed a naval blockade on Iranian ports, but there have been no signs of progress towards a US-Iran agreement to fully open the Strait of Hormuz. An Iranian military spokesperson stated that no ship can pass through the strait without Iran's authorization and supervision, contradicting President Trump's claim that the US has 'total control over the Hormuz Strait'.

The disruptions in the Strait of Hormuz have slowed traffic, tightening global crude supplies and boosting oil prices. The International Energy Agency (IEA) reported that the global oil supply deficit will worsen due to ongoing disruptions from the US-Iran war, with global oil inventories expected to fall at twice the previously estimated rate in Q3.

OPEC delegates approved their final increase of +188,000 bpd in crude production for September, which might be difficult to achieve amid renewed US-Iran military attacks. The group has restored all of the 1.65 million bpd supply cutback it made back in 2023 and plans to hold output steady for the rest of the year after the September hike.