Crude oil prices edge higher for fourth straight day on Middle East tensions, Brent near $80/barrel

Crude oil prices moved up for a fourth straight day on Friday, August 9, with the Brent and WTI edging in the green during the early trading hours.

Brent, the global crude benchmark, was nearing the $80 per barrel mark. Its futures for September delivery were trading at $79.25 a barrel at 0245 hours GMT, up 0.10% as against the last closing price.

The U.S. West Texas Intermediate (WTI), the American crude benchmark, climbed 0.13% to $76.3 per barrel.

Haniyeh, who was invited to Tehran to attend the swearing-in of the newly elected Iranian President, was assassinated in an alleged Israeli airstrike on July 31.

Since then, the commodities market has been under pressure as Iran's retaliation may lead to a direct military confrontation between the two arch-rivals.

Why crude rates may sharply rise due to Iran-Israel conflict

Iran shares its coastline with the Persian Gulf, which separates the country from the Arabian Peninsula. The gulf is home to the Strait of Hormuz, from where one-fifth of the world’s total oil supplies are routed.

An eruption of a direct military conflict between Iran and Israel may lead to the closure of shipping via the Strait of Hormuz, analysts said. Between January and September 2023, 20.5 million barrels per day (bpd) of crude oil, condensate and oil products were flowed through the strait, as per the data shared by analytics firm Vortexa.

The US Energy Information Administration (EIA) describes the Strait of Hormuz as the “world’s most important chokepoint”. Oil flow averaged 21 million bpd, or the equivalent of about 21% of global petroleum liquids consumption in 2022, it said.

The disruption of shipping lines due to the closure of Strait of Hormuz may result in a massive spike in oil prices globally, JPMorgan had warned in a note issued in October 2023, when it was feared that the eruption of Israel-Hamas war in Gaza may lead to a wider regional conflict involving Iran.

"If the conflict broadens to include the closure of the Strait of Hormuz —the world's busiest oil-shipping channel— it would shut down the region's oil trade, supercharging oil prices," it had stated.

Based on tanker tracking data published by Vortexa, Saudi Arabia moves more crude oil and condensate through the Strait of Hormuz than any other country. Around 0.5 million bpd transited the strait in 2022 from Saudi ports in the Persian Gulf to Saudi ports in the Red Sea.