Global oil prices jumped more than 1% in early trading on Wednesday, following the outbreak of new and violent hostilities in the Middle East, where Iran fired ballistic missiles towards the countries of Kuwait and Bahrain, at a time when diplomatic talks between Tehran and Washington failed to make any tangible progress to stop the sharp conflict.
Brent crude rises to over $97
Brent crude futures rose $1.05, or 1.09%, to $97.05 a barrel, while U.S. West Texas Intermediate crude climbed $1.01, or 1.08%, to settle at $94.77, hitting a one-week high.
Financial markets have faced worrying signals about the viability of maritime navigation, with Daniel Haynes, chief commodity strategist at ANZ Bank, asserting that any efforts to reopen the Strait of Hormuz naturally are being met with a war of naval mines planted by Iran in large parts of this vital waterway, leaving the number of ships passing through well below pre-conflict levels.
The Strait of Hormuz is the coronary artery of global energy supplies, with nearly one-fifth (20%) of the world's crude oil and liquefied natural gas supplies flowing through this narrow corridor, and the current war has caused near-total paralysis of tanker traffic, threatening energy security in major economies.
Very limited movement of tankers through Hormuz
Ship tracking data from Kepler and the London Stock Exchange Group showed a very rare and limited movement of tankers, as the tanker "Cy Victorious" loaded with Iraqi fuel oil and the Kuwaiti tanker "STI Elysée" left the Strait of Hormuz in recent days.
In this context, the analytics firm "Vortexa" monitored the "Marigold" liquefied natural gas tanker "Marigold" of the UAE company "ADNOC" closed the Automatic Identification System (AIS) to cross the strait "stealth" towards the west to reload from Das Island, to join three other Emirati tankers that adopted the same stealth tactic to escape missile and mine targeting.
Political Contradiction and Decline in Stockpiles
These developments were accompanied by tight oil supply in the markets, as market sources citing data from the American Petroleum Institute (API) revealed that US crude oil inventories fell by 6.8 million barrels in the week ended May 29, the seventh consecutive weekly decline, pending the release of official government data later.
The continued decline in U.S. inventories is adding to the upward pressure on prices, as dwindling trade reserves in the world's largest energy consumer reduce markets' ability to maneuver any sudden disruption in Persian Gulf supplies.
International warnings of economic downturn
The Organisation for Economic Co-operation and Development (OECD) predicted a sharp slowdown in global economic growth to 2.8% this year compared to 3.4% in 2025, driven by the harsh repercussions of the war in the Middle East and its direct effects on supply chains and inflation rates.
Rising energy prices and industrial and agricultural inputs from the Gulf are weakening real household incomes globally, with energy-importing Asian and developing economies being the most vulnerable to these shocks due to their near-total dependence on Middle Eastern oil.
The first assumes a "time-limited disruption" in which the crisis subsides by the third quarter of 2026 as inflation in the G20 countries rises to 4%.
The second most serious scenario, "prolonged disruption", warned that exports will continue to be disrupted until the second half of 2027, which could bring global growth down to 2.1% and then 1.8%, pushing major economies towards a violent stagflation and rising unemployment, in conjunction with a slowdown in global trade growth to 3.1% this year compared to 5% last year.