Oil Price Rises Following Incident in Hormuz Strait

Oil prices rose following new security risks at the Strait of Hormuz. Brent and WTI crude oil prices increased by approximately 0.8% to 1%. The reason was an incident off the coast of Oman, when an explosion and fire occurred on one of the tankers. The incident resulted in no casualties, however investors once again took into account that risks associated with shipments through the Strait of Hormuz still exist. A significant portion of oil exported globally is transported through this very route.

At the same time, an increase in oil supply is expected. Saudi Aramco reduced oil prices for Asian buyers, which happened for the first time since 2020. OPEC+ also decided to increase production from August. Typically, such steps contribute to price declines, however the situation in the Middle East currently has a greater impact on the market at this stage.

According to analysts' assessments, oil supply will increase in the coming period, however demand for fuel remains high. Therefore, a sharp price decline is not expected for now. Market attention is now focused on the upcoming report from the U.S. Energy Information Administration (EIA), which will release new data on production and demand. According to experts, in the near term, oil prices will be most influenced by the situation in the Strait of Hormuz and the volume of exports from the Persian Gulf.

Source: Investing.com