Oil Prices Soar on Iran Conflict Fears

Oil prices ended July on a high note, surging more than $1 per barrel to close out their strongest month since March. Brent futures settled at $90.12 a barrel, up 1.2%, while WTI futures closed at $84.67 a barrel, up 1.3%. The gains for the month were impressive, with Brent rising 24% and WTI increasing by 21%. The war in Iran has disrupted global crude flows, particularly through the Strait of Hormuz, where Iranian forces have blocked or forced several tankers to turn back.

Talks between Iran and Oman on managing the strait continue, but geopolitical risks remain high. Ole Hvalbye, a market analyst at SEB Research, noted that 'the market has stopped trading the war and started trading the shipping data.' The Strait of Hormuz is a critical chokepoint, carrying about one-fifth of global crude oil and natural gas supplies.

The conflict has curtailed traffic through the strait, with only two very large crude carriers passing through on Friday. Meanwhile, 29 commodity vessels transited the Bab el-Mandeb strait at the southern end of the Red Sea. Saudi Arabia is seeking to lead a coalition to boost defense cooperation in the region.