Global oil prices have climbed back above $90 a barrel after a cargo vessel was struck by a projectile in the Strait of Hormuz, intensifying fears that the escalating conflict involving Iran could trigger a prolonged disruption to one of the world’s most critical energy shipping routes.
Brent crude, the international benchmark, rose sharply to around $92.34 a barrel, recovering from earlier losses and extending the dramatic volatility seen across energy markets over the past 48 hours. The latest surge followed reports from the United Kingdom Maritime Trade Operations (UKMTO) that a commercial cargo ship had been hit by an unidentified projectile in the Strait of Hormuz, causing a fire onboard.
The incident is the latest in a series of attacks targeting vessels in the Gulf region, underscoring the growing risks to global oil and gas supply chains as the Middle East conflict intensifies.
Shipping through the Strait of Hormuz, a narrow waterway between Iran and the United Arab Emirates that typically carries around one-fifth of the world’s oil exports, has almost completely halted as commercial operators weigh the risks of operating in the area.
Peter Aylott, director of policy at the UK Chamber of Shipping, said attacks on vessels have been indiscriminate and spread across the region, including incidents near Kuwait and in the western Persian Gulf.
He warned that the danger of further strikes has effectively paralysed maritime traffic.
“Shipping passing through the strait has dropped from around 100 vessels per day to fewer than five, and most of those appear to be Iranian ships,” Aylott said.
The situation has left around 1,000 commercial vessels stranded in the Gulf, including an estimated 80 to 90 ships with UK interests, as shipping companies refuse to risk moving cargo through the increasingly dangerous corridor.
Two additional vessels, a bulk carrier and a container ship, were also reportedly struck within the past 24 hours, raising concerns that the disruption could deepen if hostilities continue.
Energy markets have experienced extraordinary swings as traders attempt to gauge how long the conflict will last and whether the Strait of Hormuz will reopen to normal shipping.
Brent crude surged to over $118 per barrel earlier in the week, its highest level since 2022, before dropping close to $80 a barrel amid reports that governments were considering releasing emergency oil reserves.
The benchmark then rebounded strongly after the latest shipping attack, reflecting continued uncertainty about supply.
At one point during Asian trading, Brent had slipped to $88 per barrel, after the Wall Street Journal reported that the International Energy Agency (IEA) was considering the largest coordinated release of oil reserves in its history.
Such a move would surpass the 182 million barrels released in 2022 following Russia’s invasion of Ukraine.
However, the attack in the Strait of Hormuz quickly shifted market sentiment back toward supply fears, sending prices climbing again.
Overall, Brent crude has now risen more than 40 per cent since the start of the year, driven by escalating geopolitical tensions and concerns over disruptions to global energy flows.
Further uncertainty has emerged over whether military escorts might be used to secure shipping routes through the Strait of Hormuz.
US energy secretary Chris Wright briefly posted on social media that the US Navy had escorted an oil tanker through the strait to ensure energy supplies continued flowing.
The post was quickly deleted, and American officials clarified that the US military is not currently escorting commercial vessels through the waterway.
The confusion has added to investor uncertainty about the security of global energy shipments and the potential for further escalation.
Without clear military protection or a diplomatic breakthrough, shipping companies are expected to remain cautious about returning to the route.
The renewed surge in oil prices has triggered declines in European stock markets as investors worry about the economic impact of higher energy costs.
In London, the FTSE 100 fell 1 per cent to 10,301, reversing gains from the previous day. Shares also dropped across major European markets including Germany and France, while Asian equities posted modest gains overnight.
Higher oil prices are widely expected to push up inflation worldwide, potentially forcing central banks to keep interest rates higher for longer.
European leaders have warned that the conflict is already driving up energy import costs across the continent.
Ursula von der Leyen, president of the European Commission, said the disruption has already cost the European Union around €3 billion in additional energy imports.
“Gas prices have risen by 50 per cent and oil prices have risen by 27 per cent,” she told EU lawmakers in Strasbourg.
“That is the price of our dependency.”
Despite the spike in prices, von der Leyen rejected calls for the EU to return to purchasing Russian energy — imports that were largely halted after Russia’s full-scale invasion of Ukraine in 2022.
Energy traders say the key question now facing markets is how long the Strait of Hormuz will remain effectively closed.
If tanker traffic remains severely restricted, analysts warn that oil prices could climb even higher in the coming weeks, potentially surpassing previous crisis levels.
The Strait of Hormuz crisis has already drawn comparisons with previous global energy shocks, and economists warn that prolonged disruption could slow global economic growth while reigniting inflationary pressures.
For now, markets remain caught between expectations of emergency supply releases and the very real risk that the world’s most important oil shipping route could remain unusable for an extended period.
Jamie Young
Jamie is Senior Reporter at Business Matters, bringing over a decade of experience in UK SME business reporting.
Jamie holds a degree in Business Administration and regularly participates in industry conferences and workshops.
When not reporting on the latest business developments, Jamie is passionate about mentoring up-and-coming journalists and entrepreneurs to inspire the next generation of business leaders.
