Oil Prices Rebound, But Alternative Routes Through Hormuz Limit Iran's Control

Oil prices retreated on Thursday after a significant surge in the previous session. West Texas Intermediate (WTI) crude fell 0.54% to $84.00 a barrel, while Brent crude dropped 0.85% to $89.97 a barrel.

This decline came despite rising tensions in the region, with military actions escalating between Iran and its adversaries. US-Saudi strikes targeted Iran-backed paramilitary forces in Iraq on Wednesday, marking the first publicly acknowledged involvement of Saudi Arabia in US air strikes.

Preliminary data revealed that 39 commodity vessels entered the Red Sea through the Bab el-Mandeb Strait on Tuesday, the highest number since July 19. However, traffic through the Strait of Hormuz remained limited, with IG market analyst Tony Sycamore noting that oil continues to find alternative routes, which may diminish Iran's control over the Strait of Hormuz.

Saudi Arabia is reportedly working to form a coalition to safeguard shipping in the Red Sea from Houthi attacks, which have threatened to impose a naval blockade.