Two cargo ships sunk in Strait of Hormuz as Iran ramps up attacks in run-up to midterms

Oil prices edged downward on Friday but remained on course for a notable weekly increase due to continued concerns over supply disruptions in the Middle East. At 12:59 p.m. UAE time, Brent crude, the benchmark for roughly two-thirds of the world’s oil, fell 0.77 percent to $105.10 a barrel. Meanwhile, U.S. West Texas Intermediate (WTI) crude dipped nearly 1 percent to $97.04. Despite these daily declines, WTI is projected to see a weekly gain of more than 5.6 percent, reflecting the ongoing tensions affecting the region. The International Energy Agency (IEA) recently warned that the global diesel shortage caused by the conflict in Iran will persist well into next year. According to the agency, depleted inventories are not expected to recover until the second half of 2027. This outlook underscores the prolonged impact of the crisis on global fuel markets. In response to the situation, G7 leaders have committed to accelerating the release of emergency oil reserves, aiming to distribute 100 million barrels of diesel and other fuels to stabilize the market. Additionally, the Trump administration has taken steps to alleviate the crisis by lifting certain sanctions on Russia, allowing the country to supply millions of barrels of diesel to international markets. Norbert Rucker, head of economics and next-generation research at Julius Baer, noted that current oil market levels "still seem to be somewhat lofty compared to market realities." He emphasized that while the market appears to be in a delicate balance, the flows of oil from the Middle East have largely recovered, indicating that the region is not facing a severe shortfall. Recent developments in the Strait of Hormuz highlight the growing risks to global shipping lanes. Over the past 24 hours, two cargo ships have reportedly sunk following attacks in the area. The Singapore-registered container ship GFS Pride was struck while passing through the strait, leading to a fire and subsequent sinking. All crew members were safely evacuated, though the incident resulted in a visible oil slick and scattered cargo in the water. Iranian state media attributed the attack to a "sea mine on an unauthorized route," a claim that experts have questioned, suggesting instead that a drone strike might have been responsible. Another vessel, the Cape Dao, registered under Antigua and Barbuda, also sank after being hit by a projectile on September 23. An Indian crew member was killed in the incident. These attacks have intensified since the end of September, significantly reducing the amount of oil transiting through the Strait of Hormuz and contributing to increased global oil prices. According to maritime data tracking service Kpler, only 4.147 million barrels of oil successfully passed through the Strait of Hormuz on Monday, less than a quarter of pre-war levels. The seven-day average of oil flow through the strait has also dropped sharply since early October, further exacerbating concerns over supply chain disruptions. The U.S. military continues to enforce a blockade on Iranian ports to exert economic pressure on the country. While this strategy has contributed to Iran’s economic struggles, it has also led to an increase in oil flow from other Gulf nations through the strait, reaching near-normal levels. In response, Iran has escalated its attacks and threats, seeking to reclaim its influence over the critical waterway as American voters prepare for upcoming midterm elections. To address the rising oil prices, the Trump administration has implemented measures such as easing sanctions on Russia to facilitate the importation of diesel. However, this initiative has faced bipartisan criticism, with analysts cautioning that diesel prices could still surge toward record highs by November. The effectiveness of these actions in stabilizing the market remains uncertain, given the complexity of the geopolitical landscape and the ongoing challenges in securing safe passage for oil shipments through the Strait of Hormuz.