Oil futures surged to one-month highs last week as renewed U.S.-Iran conflict escalated threats to the Strait of Hormuz, the critical waterway through which roughly 20% of global oil supplies flow daily.
Brent crude climbed 2% to settle at $84.73 per barrel on July 14, while West Texas Intermediate (WTI) crude rose 1.5% to $79.34, according to Reuters. The gains marked the highest closing prices for both benchmarks since mid-June, as the U.S. reinposed a naval blockade on Iran after Tehran claimed it had closed the strait.
The escalation reversed a brief period of calm that had emerged in early July when a ceasefire between the U.S. and Iran appeared to hold. That truce, brokered in June, had allowed oil prices to retreat toward pre-war levels as traders priced in a return to normal supply flows through the Persian Gulf.
Conflict resumed when the U.S. launched fresh strikes on Iranian targets, prompting Iran to retaliate with drone and missile attacks on American allies in the region. On July 13, Brent crude surged 4.1% to $79.14 a barrel as both sides traded accusations over the strait’s status, according to the Straits Times. Traffic through the waterway, which normally carries about 20% of global crude and liquefied natural gas supplies, became “almost nonexistent” on July 13, extending a slowdown that began when tensions flared the previous week.
The Strait of Hormuz’s vulnerability to disruption has long made it a flashpoint for oil-market shocks. According to Brookings Institution research, roughly 20% of global oil supply—approximately 15 million barrels of crude and 5 million barrels of liquefied natural gas daily—flowed through the strait before the war. Any sustained closure threatens to remove a fifth of the world’s liquid petroleum from markets, a prospect that sends traders scrambling to buy protection through futures.
Analysts at energy advisory firm Ritterbusch and Associates warned that “the resumption of attacks between the U.S. and Iran is accelerating this week and will likely continue given the additional U.S. bombing overnight that followed reinstatement of a U.S. blockade of the Strait of Hormuz,” according to Reuters. Saul Kavonic, senior energy analyst at MST Marquee, told the Straits Times that the latest flare-up remains “well short of all-out hostilities,” but “we are likely to see oil prices inch higher for as long as the strikes continue and passage through the strait remains more hesitant.”
Escalation risks have dimmed prospects for a diplomatic breakthrough. Iran’s Parliament Speaker Mohammad Bagher Ghalibaf declared the “era of one-sided deals is over,” while Tehran insisted Washington must honor prior commitments on Strait of Hormuz transits and normalize oil exports before talks can resume. U.S. President Donald Trump declared the ceasefire “over” but signaled willingness to continue negotiations, according to the Straits Times.
The conflict’s expansion into direct strikes on energy infrastructure poses an even sharper threat to global markets. A recent Iranian attack on a Kuwaiti oil drilling facility marked the first direct strike on regional energy infrastructure in weeks. If such attacks broaden, Kavonic warned that oil could reach $100 per barrel—a level not seen since the earliest weeks of the war when initial strikes sent crude above that threshold.
The International Energy Agency cautioned on July 10 that the latest escalation risks derailing efforts to rebuild global oil inventories later in 2026, a reminder of what is at stake for the global economy if the conflict persists.
Sources
- Reuters — Oil price movements, U.S. blockade, Ritterbusch analyst commentary, and Strait of Hormuz supply share
- Straits Times — Brent crude surge on July 13, analyst Saul Kavonic commentary, Iran-U.S. diplomatic status
- Brookings Institution — Strait of Hormuz oil flow data (20% of global supply)
- International Energy Agency — Oil inventory rebuilding concerns
