Crude oil futures traded higher on Wednesday morning, with September Brent crude oil futures on ICE rising 1.25% to $92.15 per barrel and September West Texas Intermediate (WTI) futures on NYMEX gaining 1.08% to $85.25 per barrel, according to The Hindu BusinessLine. On the Multi Commodity Exchange (MCX), August crude oil futures opened at ₹8,240 per barrel, up 1.10% from the previous close of ₹8,150, while September futures stood at ₹8,024, up 0.51% from ₹7,983.
Geopolitical Drivers
The price rally was driven by the US military's continued strikes on Iranian targets, now in their 11th consecutive day. A statement from the US Central Command, reported by The Hindu BusinessLine, said that forces successfully completed the 11th consecutive evening of strikes against Iran at 8.15 pm ET on July 21. The strikes targeted Iranian military operations centres, maritime capabilities, aircraft hangars, drone storage facilities, and military logistics infrastructure. The stated objective was to further degrade Iran's ability to threaten commercial shipping in the Strait of Hormuz. Over the past three months, Iran has attacked more than 30 commercial vessels transiting the waterway, according to the US Central Command. Despite the aggression, the Strait of Hormuz remains open for commercial vessel transit, the statement said.
Supply-Side Disruptions
Beyond the Persian Gulf, other supply threats are emerging. Analysts Warren Patterson and Ewa Manthey of ING Think noted that hopes of a temporary ceasefire between the US and Iran had faded after US President Donald Trump ruled out immediate talks. Additionally, the Houthis' announced maritime blockade on Saudi Arabia has made shippers nervous, with several tankers moving to avoid the Bab el-Mandeb Strait. This forces tankers to enter and exit the Red Sea via the Suez Canal, adding significant time and expense to voyages to Asia, according to the ING analysts.
| Disruption | Impact | Source |
|---|---|---|
| US strikes on Iran | Targeting military infrastructure to protect Strait of Hormuz shipping | US Central Command |
| Iran attacks on commercial vessels | Over 30 vessels attacked in three months | US Central Command |
| Houthi blockade on Saudi Arabia | Shippers avoiding Bab el-Mandeb Strait, rerouting via Suez Canal | ING Think |
| Russia's CPC terminal suspended loadings | ~1.7 million bpd of Kazakh crude disrupted; could force Kazakhstan to cut upstream production | ING Think |
In the Black Sea, Russia's Caspian Pipeline Consortium (CPC) terminal has stopped receiving oil from Kazakhstan, with loadings suspended following ongoing attacks on tankers. Volumes shipped from the CPC terminal are significant—around 1.7 million barrels per day in June, according to ING Think. The longer the suspension drags on, the greater the likelihood that Kazakhstan will be forced to curb upstream production, the analysts said.
Demand-Side Context
While demand-side data was not the primary focus of the article, the disruptions to key shipping routes directly threaten the flow of crude to consuming regions. The rerouting of tankers via the Suez Canal adds both time and cost, which could tighten supply availability in Asian markets.
Price Outlook
ING Think's Patterson and Manthey argued that factoring in renewed disruptions from the Persian Gulf, risks to Saudi crude exports from the Red Sea, and developments in the Black Sea, Brent at just over $91 a barrel may be undervalued, particularly if these disruptions persist into August. The analysts did not provide a specific price target but implied further upside potential based on the current risk premium.
In other commodities mentioned in the same report, July menthaoil futures on MCX traded at ₹1,272.80, down 1.12% from the previous close of ₹1,287.20. On the National Commodities and Derivatives Exchange (NCDEX), August turmeric (farmer polished) contracts were at ₹21,250, down 1.28% from ₹21,526, and August jeera futures were at ₹21,205, down 0.45% from ₹21,300.
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