Oil Price Today (July 9): Crude oil nears $80, up for 3rd day as US launches fresh strikes on Iran. Hormuz supply in jeopardy?

Oil prices climbed on Thursday, extending gains for a third day in a row, after the United States carried out fresh strikes on Iran, weakening hopes of a resolution to the Iran war and delaying expectations of a full reopening of the Strait of Hormuz, through which one-fifth of pre-war global oil supplies typically pass.

Crude oil price on July 9

Brent crude futures gained 78 cents, or 1%, to $78.8 a barrel while U.S. West Texas Intermediate (WTI) crude futures rose 74 cents, or 1.01%, to $74.26 a barrel. On Wednesday, the two benchmarks had settled at their highest levels in more than two weeks after U.S. President Donald Trump warned of additional strikes on Iran as early as Wednesday night.

The U.S. military said the latest strikes were aimed at keeping the strategically important Strait of Hormuz open to shipping, just hours after Trump declared that the interim agreement to end the war was "over".


The United States said the latest military action was in response to Tuesday's attack on three tankers passing through the Strait of Hormuz. The strikes reportedly shook several cities along Iran's southern coast and left parts of the region without electricity.

Iran, meanwhile, said on Wednesday that it had targeted U.S. military facilities in Bahrain and Kuwait in retaliation for earlier American strikes on infrastructure.

Also read: Iran: Gulf on boil again as new US strikes mark fresh escalation; fear rises of a return to war

Where are prices headed?

"The latest developments have effectively thrown the future of the 60-day negotiation process into doubt," Bjarne Schieldrop, chief commodities analyst at SEB, told Reuters. "In my view, a price closer to $80 a barrel is more consistent with current market fundamentals than $70," he added.

Last month, Saudi Aramco Chief Executive Officer Amin Nasser warned that any prolonged disruption in the Strait of Hormuz could postpone the return of stability to global oil markets until 2027. He said an extended disruption could affect nearly 100 million barrels of oil supply every week. Saudi Aramco is the world's largest oil producer.

Industry experts believe shipping activity through the Strait of Hormuz is unlikely to normalise anytime soon. They said the process would require coordinated movement of vessels, restarting oil production, repairing damaged infrastructure and reaching agreements on de-mining operations. Several shipowners also remain reluctant to resume operations in both the Strait of Hormuz and the wider Persian Gulf.

Read more: Trump wants to leave the Iran war behind. That won't happen soon

Analysts noted that global oil inventories were drawn down during the prolonged disruption to shipping through the strait and will take time to rebuild. They expect stockpiles to remain under pressure until additional crude supplies from the Gulf begin reaching global markets.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)