Oil Prices Volatile as Hormuz Shipping Recovers Amid Fresh Security Threats

Oil prices have swung sharply following competing developments in the Strait of Hormuz, the critical waterway through which over one-fifth of global oil and liquefied natural gas exports transit. On Thursday, Brent crude surged as much as 4 percent to $74.89 per barrel after an attack on a cargo vessel prompted the United Nations maritime agency to pause its evacuation plan for stranded ships. The incident, in which a Singapore-flagged container ship was struck by an unknown projectile near Oman's Musandam exclave, underscored the fragility of peace in the region amid a tenuous US-Iran ceasefire reached last week.

Despite the attack, shipping data showed signs of recovery. On Wednesday, 70 vessels transited the strait—more than double the previous day and the highest daily count since March. However, flows remain substantially below prewar levels, when 100 to 130 vessels crossed daily. Many operators continue to exhibit caution, with some vessels disabling tracking signals or remaining outside the area. Oil prices subsequently eased on Friday as traders assessed the potential for trapped Persian Gulf supplies to resume movement, though analysts warned the market may be complacent about ongoing risks.

A dispute over safe passage has complicated the reopening. Iran's Persian Gulf Strait Authority and the Islamic Revolution Guard Corps have asserted control over maritime routing, declaring that vessels using unauthorized corridors will not receive safe passage guarantees. Oman announced a temporary coastal route, but Tehran has insisted on using only routes it designates under the war-end memorandum. The main central channel remains closed due to mines and hazards, forcing traffic through narrower northern and southern alternatives. Shipping experts estimate a full return to normal operations could take months.

The attack raises questions about market complacency as competing claims over administration of the waterway persist. Iran has signaled interest in collecting maritime service fees and expanding its role in managing transit, positions opposed by Gulf Arab states and Western governments concerned about restrictions on freedom of navigation. Oil market analyst June Goh noted that security of the passageway is paramount for crude stocks to offload from onshore tanks and production to resume normally. The incident has renewed international attention on the strategic corridor's vulnerability to further disruption.