Supertankers' U-Turn Signals Escalating Middle East Tensions, More Oil Upside After Recent Highs?

TradingKey - In light of a US airstrike on Iranian nuclear facilities, two super tankers each capable of carrying about 2 million barrels of oil made an unexpected U-turn upon entering the Strait of Hormuz, steering away from the entrance to the Persian Gulf, Bloomberg reports on June 22, Eastern Time. 

This vital chokepoint handles one-fifth of the world’s oil shipments, directly impacting international oil prices. Oil prices surged to a five-month high as Asian markets opened on Monday.

Iran Threatens to Close the Strait of Hormuz in Response to U.S. Airstrikes; Shipping Risks Escalate

On the evening of June 21, Eastern Time, former President Trump stated on his social media platform, Truth Social, that the U.S. had completed strikes on Iran’s nuclear sites at Fordow, Natanz, and Isfahan. 

In response, Iran has reserved the right to retaliate by potentially blocking the Strait of Hormuz. Analysts express concern that Iran might target commercial vessels, particularly those linked to the U.S., worsening shipping risks in the Strait and potentially limiting oil supplies from the region. 

The Iranian parliament backs closing the strait, though final decisions rest with Iran's Supreme National Security Council. 

Historically, Iran has threatened to blockade the strait and target passing commercial ships on multiple occasions.

Multiple Agencies Warn Against Strait of Hormuz; Are Further Oil Price Surges Imminent?

The Baltic and International Maritime Council (BIMCO), the largest global shipowner association, recently noted a decline in vessels passing through the Strait of Hormuz. 

Greece, holding the largest oil tanker fleet worldwide, has cautioned shipowners to employ the highest safety measures when navigating the strait and to maintain maximum distance from Iranian waters. 

The Joint Maritime Information Center (JMIC) advised U.S.-related vessels to consider alternative routes due to heightened attack risks following the U.S. strikes. 

Additionally, Yemen's Houthi rebels issued new threats against American commercial and naval ships earlier on Sunday.

The market has reacted to the escalating conflict in the Middle East and the increased shipping risks. 

Brent and WTI crude both rose over 4% in early Monday trading, reaching a five-month high since January, only to retreat and erase previous gains. 

Goldman Sachs forecasts that a prolonged blockade of the Strait of Hormuz could propel international oil prices above $100 per barrel. 

Fawad Razaqzada, a Senior Analyst at Gain Capital notes that heightened tensions in the Middle East have amplified concerns over supply disruptions; otherwise, the fundamental outlook for oil is "far from bullish," given OPEC+ production increases and tepid demand growth. 

Bank of America's chief strategist Michael Hartnett suggests that the duration of U.S. military action in Iran may be brief, as the Trump administration is wary of U.S. gasoline prices surpassing $4 per gallon.