Oil held near its highest levels in months on Tuesday after OPEC+ completed the final step in unwinding its voluntary production cuts and a fresh exchange of strikes between the United States and Iran renewed fears over shipping through the Strait of Hormuz.
Brent crude traded at $91.28 a barrel, up 0.87% on the day, while West Texas Intermediate rose 0.94% to $86.57. Brent has climbed roughly 3% in August alone, building on a 20.5% surge in July, and is up nearly 32% from a year ago.
Eight OPEC+ members — Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, Oman and the United Arab Emirates — agreed at an August 2 virtual meeting to raise output by 188,000 barrels a day in September, completing the gradual reversal of the 1.65 million barrels a day of voluntary cuts the group first imposed in 2023. The alliance signaled it would likely pause further increases after September but retained flexibility to adjust output depending on market conditions.
That supply decision has collided with renewed geopolitical risk. U.S. forces struck Iranian rocket launchers on Larak Island over the weekend after detecting preparations to fire mine-laying rockets into the Strait of Hormuz, and Iran responded with a missile-and-drone attack on bases in Jordan. The exchange, the first in weeks, has again put a premium on tanker traffic through the strait, which carries about a fifth of the world's seaborne crude.
A Market Still Bracing for Disruption
Earlier in the standoff, when Iran signaled it would keep the waterway effectively closed to Western shipping until its demands were met, analysts warned of a sharply tighter market. "The Strait of Hormuz is closed and Iran will not reopen it until all its demands are met," Dr. Mamdouh G. Salameh, an international oil economist, told OilPrice.com earlier this month, adding that he expected Brent to push past $100 a barrel if the impasse continued.
The Strait of Hormuz is closed and Iran will not reopen it until all its demands are met...Brent Crude is headed beyond $100 a barrel in the next few days.
Dr. Mamdouh G. Salameh, international oil economist, OilPrice.com
Ship-tracking data through August showed Hormuz traffic had thinned but not stopped, and Brent has so far stayed below the triple-digit mark Salameh flagged. Still, traders have kept a war-risk premium priced into crude through the summer, and Tuesday's renewed exchange of fire suggests that premium is unlikely to unwind soon.
With OPEC+ now largely out of spare-capacity moves to calm the market and the Hormuz standoff unresolved, traders say the near-term path for oil will hinge less on the group's output decisions than on whether the current cycle of strikes and reprisals stays contained.
