Brent Holds Gains, WTI Slips as Oil Market Weighs US Strikes on Iran

Oil Markets Pause After Heaviest Rally Since Spring

Oil prices struggled for direction on Thursday after the sharpest one-day jump in months, as the market weighed fresh US airstrikes across Iran against the reality that crude is still moving out of the Persian Gulf despite heightened tensions. Brent futures for September delivery hovered at $90.75 a barrel on London’s ICE Futures exchange, essentially flat from Wednesday’s close, while West Texas Intermediate for September fell 0.79% to $84.79 a barrel on NYMEX.

The muted moves followed a dramatic session a day earlier, when Brent surged $6.65, or 7.9%, after President Donald Trump vowed a forceful response to an Iranian ballistic missile attack on a US base in Jordan. Trump’s blunt language in a Fox News interview – “We will hit them hard, and it will be painful for them” – sent shockwaves through energy markets. Shortly afterward, US Central Command confirmed a two-hour wave of strikes overnight Wednesday, targeting dozens of Islamic Revolutionary Guard Corps sites including command centres, missile launch positions and coastal defence infrastructure.

Yet the feared supply disruption has been more nuanced than the headlines suggest. Despite Iran’s blocking of the Strait of Hormuz – a chokepoint for roughly a fifth of the world’s oil – an estimated 13 million barrels per day of crude continued to be exported from the region, according to Rystad Energy. Tankers, especially those with ties to Chinese buyers, have kept moving through the Bab el-Mandeb strait even after Yemen’s Houthi insurgents threatened to block Saudi shipments through the Red Sea. The net effect is a market that priced in a substantial geopolitical risk premium on Wednesday but is now pausing to see whether the physical flow of oil really stutters.

Why a Full-Blown Supply Crisis Has Not Yet Materialized

The Strait of Hormuz Paradox

The most important detail in today’s trading is the disconnect between the dramatic imagery of a blockaded strait and the steady flow of barrels reaching global refineries. While normal tanker traffic through Hormuz has ground to a halt, the oil is not staying underground. Exporters have quickly leaned on alternative pathways, including pipelines and indirect routing, while some vessels appear to be using smaller, harder-to-detect coastal routes. The longer this pattern holds, the more it erodes Iran’s ability to use Hormuz as a strategic chokepoint. IG analyst Tony Sycamore noted that “the more time goes by, the more these alternative routes and methods will weaken Iran’s leverage.” In effect, the market is testing the thesis that a Hormuz closure is no longer an instant supply catastrophe – it is a logistical challenge that the industry is learning to manage.

Who Benefits from the Stand-off

US producers are among the clearest winners. With WTI still trading at a roughly $6 discount to Brent, American crude remains highly competitive for exports to Europe and Asia, and any sustained fear around Gulf supplies amplifies the advantage. Chinese-linked tanker operators and refiners, meanwhile, may secure crude at opportunistic terms by taking on the higher risk of transiting the Bab el-Mandeb corridor. On the losing side are traditional Gulf exporters – Saudi Arabia, Iraq, Kuwait – whose on-time delivery premium is being questioned, and whose long-term contracts may face renegotiation pressure if alternative sourcing becomes entrenched.

What the US Strikes Mean for Regional Flows

By targeting IRGC command centres and coastal defence sites rather than export infrastructure, Washington appears to be calibrating its response to degrade Iran’s ability to threaten shipping without directly hitting facilities that could cause an environmental crisis or a more immediate supply loss. Still, the risk of miscalculation is high. If Iranian forces retaliate against tankers or neighbouring oil infrastructure, the alternative workarounds in play today would be overwhelmed in hours. Markets are therefore pricing in a two-state world: one where diplomacy and workarounds keep crude flowing, and another where a single attack on a major loading terminal sends Brent above $100.

What Energy Traders and Industry Should Track Next

• Energy traders should shift focus from headline risk to actual tanker tracking and port data. The key metric is not the number of vessels idled near Hormuz but the volume of crude loaded at Gulf terminals and recorded by satellite monitoring services. A two- to three-day drop in those volumes would be the first reliable signal of a real supply pinch.
• Importers in Europe and Asia need to accelerate near-term supply diversification. With Gulf crude delivery windows now carrying an uncertainty premium, locking in West African or US Gulf Coast cargoes for September arrival would reduce exposure to a sudden Hormuz shutdown that overwhelms current workarounds.
• Shipping and logistics firms should model the cost impact of a semi-permanent re-routing away from Hormuz. The alternative routes being tested now – longer voyages around the Cape of Good Hope or via Egyptian pipelines – add fuel costs and transit time that will eventually show up in physical crude premiums. Firms that can secure long-term charters on Aframax or Suezmax tankers positioned outside the Gulf will have a pricing edge in coming quarters.
• Government agencies in consumer nations will want to review strategic petroleum reserve release protocols. If the US-Iran dynamic escalates and Brent pushes toward $100, the political pressure to tap reserves – especially ahead of midterm elections in the US – will build quickly.