Oil Prices Surge as US-Iran War Disrupts Shipping
Oil prices have surged in July, with Brent crude trading near $88 a barrel and US crude gauge West Texas Intermediate (WTI) around $82. The global benchmark is up by about 20% this month, its biggest gain since March.
The escalation of the US-Iran war has disrupted shipping through the Strait of Hormuz, but recent days have seen an increase in navigation through the key waterway. Saudi Arabia is forming an alliance with representatives from 43 countries to protect navigation in and around the Red Sea, countering a blockade imposed by Iran-backed Houthi militants.
Energy markets have roared higher this month, with double-digit percentage gains for oil as well as products such as diesel. US President Donald Trump faces a dilemma over whether to escalate the conflict further or focus on calming turmoil in global energy markets.
Traders are also concerned about supply snarls in the Black Sea, where nine vessels have been attacked at or bound for the Caspian Pipeline Consortium facility in July, the most since Russia's invasion of Ukraine in 2022. The International Monetary Fund still sees a risk that the Middle East oil shock could tip the global economy into recession.