SerpApi.Org
Renewed fighting between the United States and Iran entered its second week early Tuesday, with U.S. Central Command confirming a 10th consecutive night of strikes on Iranian command centers, missile sites and air defenses. The broader war, now in its fifth month since fighting first broke out in late February, has hit oil markets hard: Brent crude is trading near $89 a barrel and gasoline sits just above $4 a gallon nationally, as the list of threats to supply kept growing overnight.
Iran's Revolutionary Guard Corps said early Tuesday it had destroyed what it called Amazon's central data infrastructure in Bahrain in a cruise missile strike, along with Patriot air defense batteries in Muharraq and Riffa. The Guard also claimed to have hit a hangar housing U.S. MQ-9 drones at Kuwait's Ali Al Salem Air Base. Neither the U.S. military nor Bahraini or Kuwaiti officials had confirmed the claims by Tuesday morning. Air raid sirens sounded across both countries overnight as their defenses intercepted incoming fire.
The bigger threat to oil markets emerged a day earlier, when Yemen's Houthis declared an immediate maritime embargo on Saudi Arabia, opening a new front along the Bab el-Mandeb Strait. The move targets the pipeline route Saudi Arabia has leaned on to move crude to the Red Sea port of Yanbu, an export path that has quietly absorbed pressure since fighting shut down most tanker traffic through Hormuz. A full closure could take roughly 7 percent of global oil supply off the market, according to Reuters.
Brent briefly broke above $90 a barrel on the news before easing back to $89 as traders weighed word that mediating countries have floated new proposals, including a possible 10-day ceasefire, to halt the fighting.
Hormuz itself keeps getting more dangerous for the ships still willing to cross it. Two tankers managed by Greek operator Dynacom were struck by projectiles Monday while sailing Oman's U.S.-facilitated southern corridor, the route shippers adopted to avoid Iranian forces closer to the traditional shipping lane. The Malta-flagged Kavomaleas caught fire in its engine room and was evacuated. The Liberian-flagged supertanker Acheloos, which can carry 2 million barrels, was also hit and diverted to anchorage. Both crews are safe. Iran's Revolutionary Guard said separately that two tankers "exploded" after attempting an unsafe southern route, though it's unclear if that referred to the same vessels. Satellite tracking shows ship-to-ship transfers outside Hormuz have nearly stopped, and supertanker crossings have fallen to about two a day, down from eight in late June.
The pain is already showing up at U.S. pumps. The national average for gasoline hit $4.003 a gallon Monday, according to AAA, up 13 cents in a week and back above $4 for the first time since mid-June, when an earlier ceasefire briefly reopened the strait. Diesel climbed to $5.10 a gallon. Prices are highest in California, near $5.49, and lowest in Indiana, around $3.35.
The human toll is climbing too. President Trump wrote on Truth Social Monday that "every time Iran kills an American Soldier they will pay for that killing many times over", after the deaths of three U.S. service members over the weekend pushed the American death toll to 17.
The Pentagon said separately that nearly 100 troops have been injured since July 7, mostly minor concussions, with 96 percent already back on duty. CENTCOM says it has helped move roughly 900 commercial vessels and 450 million barrels of crude through the strait since early May, even as the war around that traffic keeps escalating.
With mediators pushing for a pause and Tehran signaling it's still open to talks, oil traders are pricing two very different outcomes at once: a de-escalation that reopens Hormuz, or a wider war that drags Saudi Arabia's last safe export route into the fight too.
By Charles Kennedy for Oilprice.com
More Top Reads From Oilprice.com
- ADNOC Approves $6.2 Billion Gas Project in Abu Dhabi
- Pakistan Shells Out Record Sums for Spot LNG as Qatar Supply Falters
- India Keeps Buying Russian Oil at Near-Record Pace Despite Expired Waiver
Oilprice Intelligence brings you the signals before they become front-page news. This is the same expert analysis read by veteran traders and political advisors. Get it free, twice a week, and you'll always know why the market is moving before everyone else.
You get the geopolitical intelligence, the hidden inventory data, and the market whispers that move billions - and we'll send you $389 in premium energy intelligence, on us, just for subscribing. Join 400,000+ readers today. Get access immediately by clicking here.
