Shipping Disruptions Fuel Oil Price Gains Despite Crude Supply Loss

Economists at MUFG believe that oil prices remain vulnerable to fresh gains despite Friday's sharp pullback, warning that disruption to global shipping routes is becoming a bigger driver of the market than the direct loss of crude supply.

The WTI crude price in US Dollars (OIL/USD) traded at $85.88 on Friday after retreating from Thursday's spike to $92.09, but prices remain almost 23% higher in July following escalating tensions involving Iran, the Red Sea and the Strait of Hormuz.

The bank notes that Houthi attacks in the Red Sea, tanker incidents near the Strait of Hormuz and strikes on Russia's Black Sea export infrastructure have all combined to increase uncertainty surrounding global energy transportation.