Oil Prices Rise as Lebanon Clashes Resume, Hormuz Traffic Remains Slow
John Power
Oil prices regained ground on Friday as renewed Israeli strikes on Lebanon threatened the US-Iran agreement. Brent crude rose 0.65% to exceed $80 per barrel, while traffic through the Strait of Hormuz remained limited. The geopolitical uncertainty weighed on Asian markets, with Japan and South Korea seeing volatile trading.
Oil prices began to recover after the US-Iran agreement was threatened by renewed attacks in Lebanon. Brent crude, the international benchmark, rose 0.65% in Friday trading after falling as much as 0.9% earlier, as traders continued to weigh the actual impact of the US-Iran memorandum on ending hostilities and reopening the Strait of Hormuz.
Brent futures for August delivery reached $80.37 per barrel at 06:30 GMT, pushing the benchmark above $80 for the first time since Wednesday, following a prior decline after a slight increase in the number of commercial energy tankers passing through the strait.
This development came after Israel launched a series of attacks on Lebanon, killing 16 people and threatening the ceasefire agreement between the US and Iran. Clashes between Israel and Hezbollah forces in southern Israel on Friday, reported by Israeli media, left four Israeli soldiers dead.
A planned meeting between US and Iranian officials in Switzerland was canceled, reportedly due to the aforementioned attacks, although the Strait of Hormuz appeared to remain open for shipping.
Stock markets in Japan and South Korea also experienced volatile sessions. Seoul's Kospi index surged over 2.5% to an all-time high shortly after opening, then fell 1.8% before recovering to a 0.8% gain. Tokyo's Nikkei 225 rose about 0.6% at the open but ended the session down 0.08%. Markets in Shanghai, Hong Kong, and Taiwan were closed for the day.
Three Saudi-flagged supertankers carrying an estimated 6 million barrels of crude departed the Strait of Hormuz on Thursday, broadcasting their positions after weeks of masking signals in the Persian Gulf, according to maritime analytics firm Kpler. The Hong Kong-flagged tanker Tong Lin Wan and the French-flagged LNG carrier Mraikh also transited the waterway the same day, ship-tracking data showed.
Despite these transits, traffic through the strait remains a fraction of pre-conflict levels, when the route saw 120–130 vessel passages daily. More than 500 ships are estimated to be waiting to exit the Gulf through the strait, which in peacetime carries about one-fifth of the global oil supply.
While Iran and the US have pledged to reopen the waterway, ship operators remain skeptical about the safety of vessels and crews after nearly four months of threats and attacks. At least 46 attacks on ships near the strait have occurred since the conflict began in late February, killing 14 seafarers, according to the International Maritime Organization. The strait is also believed to contain unaccounted Iranian naval mines, requiring clearance operations that could take weeks.
On Thursday, the International Association of Independent Tanker Owners (INTERTANKO) called for greater transparency regarding the practical steps needed to facilitate safe passage. "Without clarity on these issues, vessels will not know whether to transit the Strait of Hormuz," said Tim Wilkins, INTERTANKO's Executive Director. "Some ships, of course, will start moving. That is natural. But shipowners have adopted a very cautious approach. The safety of the crew always comes first, and no one wants to risk a safety-first approach when everything seems to be heading in the right direction."
