Oil Rises, Iran Energy Attacks Extend Risk Premium
Oil prices rose after posting their first decline in nearly a week, as the Middle East conflict entered its third week and Iran continued attacks on energy infrastructure in the region. Brent regained ground above US$104 per barrel after dropping nearly 3% on Monday, while WTI hovered around US$97, reflecting a market that remains driven by supply risks and geopolitical headlines.
Physical disruptions were again a key theme. Operations were reportedly halted at the Shah gas field in the United Arab Emirates, oil fields in Iraq were targeted by drones and missiles, and crude oil loadings from the port of Fujairah were halted again. With shipments through the Strait of Hormuz nearly halted since the conflict began, supply pressures are beginning to be felt by consumers, particularly in Asia.
Although the US is preparing to release the first tranche of emergency reserves—which had pressured prices on Monday—the market believes the buffer doesn't change the core issues if shipping routes remain at risk and attacks on energy facilities continue. Israel also claimed to have killed senior Iranian officials, including security chief Ali Larijani, although Iran has not confirmed this, adding to the uncertainty surrounding the escalation.
On the policy front, US President Donald Trump threatened to expand the attack on Kharg Island to target oil infrastructure, while declaring that the US had “destroyed” Tehran’s ability to threaten commercial shipping and renewing its call for support from other countries to secure sea lanes. However, Treasury Secretary Scott Bessent said Washington was allowing Iran to continue shipping oil through Hormuz and that the US had not intervened in the energy derivatives market—a signal that its stabilization strategy still relies on supply lines and security coordination, not transaction restrictions.
In the region, the UAE and Kuwait are said to be cutting production further, while Saudi Arabia is seeking to increase exports through alternative routes to avoid Hormuz. JPMorgan assesses that transit through Hormuz has the potential to become “increasingly conditional,” with Iran allowing some vessels through depending on their affiliation—creating the risk of fragmentation of supply flows and increasing volatility. Tracking data also shows some vessels passing through the route very close to the Iranian coast, and the number of Iranian vessels passing through surged on Monday, including tankers bound for China.
The market implications remain asymmetric: as long as attacks on energy infrastructure continue and the normalization of Hormuz remains uncertain, risk premiums are likely to persist despite the release of reserves. The variables being monitored are the continuation of disruptions in the Fujairah/Gulf fields, the status of exports from Kharg Island, the Hormuz passage permit pattern (who can pass through), and production responses and alternative export routes. (alg)
Source: Newsmaker.id
