Crude oil prices rebounded on Wednesday, 29 July, after US President Donald Trump said in an interview with Fox News that Iran was “going to get a beating” following an attempted attack on US forces.
Brent crude, the international benchmark, climbed 7.5% or $6.15 to $88.13 a barrel, while US benchmark WTI crude rose $8, or nearly 6.3%, to $85.53 a barrel. The renewed hostilities in the Middle East reignited fears of supply disruptions after several days of relative calm.
Speaking to Fox News, Trump said the overnight attacks had been intercepted, described Iran-backed militias as “a cancer on the world,” and said US strikes on Iran-backed groups in Iraq were carried out in coordination with Baghdad. He also reiterated that diplomatic talks with Tehran would continue despite the latest escalation.
The days-long lull in hostilities came to an abrupt end after Iran launched attacks on US forces stationed across the Middle East overnight, while the United States and Saudi Arabia targeted Tehran-backed militias in Iraq.
The renewed fighting followed several days of diplomatic efforts, during which mediators reported progress toward ending the conflict that began on 28 February with US and Israeli strikes on Iran.
Although the two sides signed an interim agreement in June, intense fighting resumed this month over disagreements on reopening the Strait of Hormuz, the strategically important waterway that Iran effectively closed during the conflict.
The latest escalation has underscored how fragile hopes for a lasting ceasefire remain and has prompted traders to rebuild the geopolitical risk premium into crude oil prices.
Second warning from Trump this week
This marks Trump’s second major warning to Iran this week. Earlier, he said the United States could resume “very strong military action” if ongoing diplomatic efforts fail, while confirming that Washington had paused planned strikes to give negotiations another opportunity.
Both the United States and Iran had recently paused direct attacks following 13 days of hostilities.
During the conflict, Iran tightened its control over the Strait of Hormuz, while Iran-backed Houthi rebels in Yemen reportedly targeted two Saudi oil tankers with drones and missiles last week for violating a maritime blockade imposed on Riyadh.
The Bab el-Mandeb Strait in the Red Sea is another critical chokepoint for global energy trade, serving as a key export route for Saudi crude diverted from the Strait of Hormuz.
Sailing through the Bab el-Mandeb to Asia reportedly takes on average 16 days, versus 50 days if cargoes are rerouted through the northern Red Sea, through the Suez Canal, and then via southern Africa.
Strait of Hormuz remains in focus
Since the conflict erupted, market attention has remained firmly on the Strait of Hormuz, through which nearly 20% of the world’s seaborne oil trade passes.
Although tanker traffic briefly resumed after the interim agreement last month, allowing Iranian crude exports to return to global markets, the latest flare-up has once again raised concerns over the security of the vital shipping lane and the potential for fresh supply disruptions.
Iran is said to have rejected Oman’s proposal for a 50-50 joint management arrangement for the Strait of Hormuz, insisting that Tehran retain full control over the inbound shipping lane and part of the outbound route.
Yemen’s Houthis plan to collect fees
Yemen’s Houthi group is considering imposing fees on commercial ships sailing through the southern Red Sea, a week after declaring a naval blockade on Saudi Arabia, Reuters reported, citing regional sources with knowledge of the matter.
The Houthis were looking into imposing fees on most traffic through the narrow Bab el-Mandeb gateway, which links the southern Red Sea with the Gulf of Aden, the sources said. No timeframe was given at this stage for implementation, they added.
(With inputs from Reuters and AP)
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