Iran intensifies Strait of Hormuz attacks as oil flows slow

Iran has escalated its attacks on oil tankers in the Strait of Hormuz, targeting seven vessels since September 28 and an eighth on Sunday. The renewed strikes come after a brief lull in hostilities, during which oil exports had nearly returned to prewar levels. Analysts warn that the attacks are already slowing oil flows, with early estimates suggesting a reduction of two to three million barrels per day.

Iran's Islamic Revolutionary Guard Corps navy issued a warning to ships using the U.S.-backed route, advising them to avoid the strait to prevent becoming targets. Despite U.S. efforts to strike Iranian oil tankers in response, the U.S. has backed off due to Iran's retaliatory missile attacks on a U.S. air base in Jordan. A U.S. official confirmed that Iran's targeting abilities have improved, undermining claims of U.S. control over the strait.

Fuel prices in the U.S. remain high, with the average gas price at $4.37 per gallon and diesel at $6.32. Brent Crude is trading above $100 per barrel, and analysts predict it will stay there through the end of the year and into 2028 if Iran continues its precise targeting. Saudi Aramco CEO Amin Nasser warned that even if the strait reopens, replenishing inventories and meeting demand could take up to two years, indicating that high gas prices are likely to persist.

The global oil market faces additional pressures, including Russia's invasion of Ukraine, Houthi rebel attacks in Yemen and Saudi Arabia, and China's suspension of fuel exports. These factors contribute to the fragility of the current oil market equilibrium, which could easily be disrupted by further escalations.