Oil Prices Rise as Iran Tightens Control Over Strait of Hormuz

Oil prices climbed on Friday after Iran said it had stopped two vessels attempting to leave the Strait of Hormuz, heightening concerns over global energy supplies following a drone attack on ships at Egypt’s Mediterranean port of Damietta earlier this week.

Iran also claimed that four other tankers turned back after its forces intervened, although those reports could not be independently verified.

Despite the tensions, two large oil tankers carrying crude from the Gulf were tracked passing through the Strait of Hormuz, the narrow waterway between Iran and Oman that normally handles about one-fifth of the world’s energy shipments.

Two other commodity vessels also transited the strait, according to shipping data from Kpler, although the data does not include ships travelling with their transponders switched off.

Iran has restricted most shipping through the Strait of Hormuz since the conflict began five months ago. Meanwhile, its Houthi allies in Yemen have expanded threats to the Bab el-Mandeb Strait, another critical shipping route connecting the Red Sea to the Gulf of Aden and serving as a key export corridor for Saudi oil.

Oil prices rose more than 1% on Friday, with traders citing the Iranian reports. Brent crude futures are on course to gain 23% in July, while economists and analysts surveyed by Reuters expect prices to continue rising through the year.

There were no reports of fresh U.S. attacks on Iran overnight following a major escalation earlier this week, when joint U.S.-Saudi strikes targeted Iranian-backed forces in Iraq.

Speaking to Fox News on Friday, U.S. President Donald Trump said the conflict was progressing well.

“All you can do is keep winning, then eventually something will happen,” he said, without providing further details.

Iranian Control

A body responsible for managing the Strait of Hormuz said on Friday that crossings remained impossible because of what it described as continued aggressive actions by U.S. military forces in the region, according to Iranian media.

Some vessels have reportedly negotiated passage with Tehran, a move that has drawn criticism from Washington.

The Persian Gulf Strait Authority said transit requests would be reviewed and permits issued gradually once stability returns.

U.S. Central Command said on Thursday that American forces were continuing to block Iranian oil exports through the Gulf and had completed another major wave of strikes.

Iran’s military said it launched attacks on U.S. military facilities in Kuwait and Bahrain on Friday in retaliation for recent U.S. strikes, including an attack on a house on Qeshm Island near the Strait of Hormuz, where Iran has intensified attacks on shipping.

Kuwait’s military said it intercepted the attacking drones, reporting only minor damage from falling debris and no casualties. Bahrain had not commented at the time of reporting.

Oil Prices Expected to Rise Further

Despite attacks on vessels in the Strait of Hormuz and Bab el-Mandeb, the Suez Canal and the SUMED pipeline have remained secure routes for transporting Saudi oil through the Red Sea.

No group has claimed responsibility for Wednesday’s drone attack that set two vessels on fire at Egypt’s Damietta port, about 160 kilometres west of the Suez Canal. Iran has denied any involvement.

Iranian Foreign Minister Abbas Araqchi described Egypt as an important regional partner and called for vigilance against what he alleged were Israeli attempts to destabilise the region through false-flag operations.

Israel’s Prime Minister’s Office did not immediately respond to Reuters’ request for comment.

Saudi Pushes for Maritime Defence Coalition

On July 20, Yemen’s Iran-backed Houthis declared a maritime embargo on Saudi Arabia, opening a new front in the conflict involving the United States and its allies.

Following recent Houthi attacks on commercial shipping, London’s marine insurance market expanded its high-risk zone in the Red Sea to include additional coastline near Saudi ports.

Saudi Arabia announced plans on Thursday to establish a multinational maritime defence coalition aimed at protecting international shipping lanes and energy supply routes in the Red Sea.

According to Kpler, increasing volumes of Saudi oil and other cargo are now being rerouted north through the Red Sea, the Suez Canal and the SUMED pipeline. However, shipments bound for Asia face longer journeys around Africa instead of using the Gulf of Aden.

Meanwhile, Oman has proposed a Gulf-backed plan under which Iran would help manage the Strait of Hormuz by collecting voluntary transit fees, according to sources familiar with the discussions.

Although Iran has publicly rejected the proposal, its semi-official ILNA news agency quoted Foreign Ministry spokesperson Esmaeil Baghaei as saying negotiations with Oman over the future management of the strait are still ongoing.