Oil Prices Hold Steady Amid Escalating Tensions and Disrupted Shipping

Oil prices have remained steady despite increased tensions between the US and Iran. A drone strike in Egypt led to a suspected attack on two ships, causing them to catch fire at the Mediterranean port of Damietta. The strike was reportedly designed to show how vulnerable global shipping and energy supplies are to disruption.

The Strait of Hormuz has seen ship traffic drop to below a tenth of pre-war levels. As a result, Qatar is scrambling to buy LNG cargoes from the US that it can resell to its customers in Asia. Meanwhile, US crude oil stockpiles have hit new lows.

Riyadh is attempting to assemble an international coalition to protect Red Sea shipping, with dozens of countries reportedly involved in discussions. The Houthis are considering imposing transit fees on most Bab el-Mandeb traffic, a plan that Iranian advisers helped shape and from which Chinese ships would be exempt.