Oil Extends Gains as Iran-Oman Strait of Hormuz Shipping Pact Draws Focus

Oil extended gains as Iran and Oman discussed a plan to manage vessel traffic through the Strait of Hormuz, stoking concern that Tehran could strengthen its control over one of the world’s most critical crude shipping routes.

Bloomberg reported on September 7 that West Texas Intermediate rose above $92 a barrel and Brent settled at $97. Iran said an agreement with Oman was in the final stages and would include temporary safe corridors for vessels transiting the strait.

If finalized, the deal could further expand Iran’s influence over shipping operations in the Strait of Hormuz. The U.S. response is also in focus after Washington attacked an Iranian tanker over the weekend. Iran had also warned that ships sailing near Oman could face the risk of attack.

Concerns about disruptions to Middle East oil supplies have intensified as clashes between the U.S. and Iran have escalated again. Oil prices jumped sharply last week, and gains since the war began in late February have exceeded 30%.

Still, crude shipments through the Strait of Hormuz have not been completely cut off. U.S. Energy Secretary Chris Wright said last week that about 8 million barrels of oil a day were being exported from the Persian Gulf. Some tankers were also reported to be sailing with their Automatic Identification System, or AIS, turned off to avoid revealing their location.

Meanwhile, Aramco oil facilities in Saudi Arabia’s Jizan region, near the Red Sea, were hit in another attack on September 7. No major damage was reported from the latest strike, but one of the area’s main refining facilities had already suspended operations after an earlier wave of attacks.