Iran's Grip on Hormuz Tightens, Middle East Oil Market Plunges into Uncertainty

The Middle East oil market is facing an uncertain future as Iran's control over the Strait of Hormuz tightens. Despite ongoing military strikes, neither a full-scale war nor peace has taken hold in the region.

The energy sector appears weaker and more vulnerable than at any point since the conflict began, with shipping routes constrained, energy infrastructure under attack, and importers avoiding supplies from the region.

The situation took a turn for the worse when the Houthi militia declared an embargo on Saudi exports, complicating shipments from Saudi Arabia's west coast. The security situation continues to deteriorate after the collapse of the US-Iran interim ceasefire deal in June.

As a result, Middle East exports have declined dramatically, with combined exports from the Gulf and Saudi Arabia's west coast slipping to around 6.2 million barrels per day, less than half the wartime peak of 13.4 million bpd hit in late June.