US-Iran Tensions Send Oil Prices into Limbo

Oil prices barely budged on Wednesday as tensions between the US and Iran remained high. The Strait of Hormuz, a critical oil transit route, was attacked by Iran-aligned Houthis for the second time in recent days.

The Houthi attacks, which also targeted vessels in the Bab el-Mandeb strait, further strained relations between the two nations. According to data, transits through the Strait of Hormuz fell to just eight on Tuesday, down from 125-140 vessels pre-war levels.

In related news, the US and Iran have made little progress in their peace talks, with a senior Iranian source telling Reuters that there were no discussions to extend their ceasefire. This lack of progress has led analysts to become increasingly skeptical about the possibility of a successful agreement.

The Organization for Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) have both revised downward their oil demand outlooks, with the IEA predicting a 1.6 million barrel per day contraction this year and a 4.3 million bpd drop in supply for 2026.