The oil market reacted with a sharp price spike against the backdrop of escalating tensions in the Persian Gulf. On Wednesday, July 29, the cost of black gold rose by approximately $3 per barrel. The cause was the escalation of the conflict following joint strikes by the US and Saudi Arabia on Iraqi territory.
Sharp rise in quotes
Trading showed a confident rise in key grades. Brent crude futures rose by $3.15, which is 3.8%, reaching the mark of $87.24 per barrel. The American grade West Texas Intermediate (WTI) added $2.73, or 3.4%, settling at $81.99.
The price increase began immediately after the US statement about intercepting a missile strike aimed at American military personnel. In response to the threat, Washington and Riyadh conducted a joint operation against Iran-backed groups. The US accused these formations of drone attacks on Saudi oil facilities. In Tehran, in turn, called such accusations a "serious error".
Trends in the Middle East
Recent events have significantly reduced expectations of a quick de-escalation of the conflict in the region. The logistics situation remains tense: on July 28, only five cargo ships passed through the Strait of Hormuz, indicating a low level of tanker traffic.
DBS Bank analysts forecast that Brent prices will fluctuate in the range of $80 to $100 per barrel in the near future. Experts link this to the instability of the situation in the Middle East, where the conflict subsides and then flares up with renewed force. According to specialists, even in the event of partial de-escalation, the complete lifting of the blockade of the Strait of Hormuz is unlikely, which will allow prices to remain at around $80.
Price support factors
Against the backdrop of geopolitical risks, the market is also reacting to fundamental data. Preliminary estimates suggest that US crude oil inventories for the week ended July 24 fell by approximately 3.3 million barrels. An additional factor supporting prices was the OPEC+ decision to suspend the increase in oil production for three months, starting in October.
Details of the military operation
On July 28, the US, together with the armed forces of Saudi Arabia, launched a series of precision strikes on the positions of pro-Iranian militants in Iraq. The operation was a response to a series of attacks that, according to US intelligence, were coordinated by the Islamic Revolutionary Guard Corps (IRGC).
In Washington, it was emphasized that the joint action was a "decisive response" to more than 30 drone attacks carried out by Iran-backed groups in the last 72 hours. US military also reported that none of the attempts to attack US forces achieved their objective.
