Oil Price Above $90: Escalation in the Strait of Hormuz

The price increase is driven by concerns over further escalation in the Middle East conflict, which is once again slowing shipping traffic in the Strait of Hormuz, a key waterway for oil and gas trade. To halt Iranian attacks on commercial vessels in the Strait of Hormuz — crucial for global trade in oil, gas, and fertilizer — the US military has, for a ninth consecutive night, been bombing targets in the Islamic Republic.

In response to the nights-long US attacks, Tehran is carrying out retaliatory strikes against countries hosting US military bases in the region. The Gulf state of Kuwait, for instance, reported renewed shelling overnight. The country's army announced that air defenses were repelling "hostile drones" from Iran. Sirens also sounded repeatedly in Bahrain, another Washington ally.

Impact on Gas Trade

According to US media reports, Washington is deploying additional fighter and tanker aircraft to the conflict zone. Observers interpret this as a sign that the United States is preparing for a prolonged confrontation. The mounting attacks "all point to the conflict potentially expanding both in scale and duration," Saul Kavonic, energy analyst at MST Marquee, told the news agency Bloomberg.

The effects on energy markets are being felt immediately. Since Thursday, no liquefied natural gas (LNG) tankers have been recorded transiting the strait. Some vessels, however, temporarily switch off their transponders to conceal their route. Overall, LNG tankers with a combined capacity of nearly 1.9 million tonnes are currently in the region. In mid-July, seven loaded Qatari LNG tankers were carrying an estimated 570,000 tonnes.

LNG production in Qatar and the United Arab Emirates has remained relatively stable despite the disruptions, according to S&P Global. These ships could enable a rapid increase in exports should the de facto blockade of the Strait of Hormuz ease in the coming weeks, the S&P Global analysts noted.

Consequences for Austrian Gas Stations

The effects of the conflict are already visible at domestic fuel pumps. According to current E-Control data, the Austrian nationwide median for diesel stood at 1.72 euros per liter on July 1, rising to 1.919 euros per liter by Sunday (July 19). The median for premium gasoline climbed from 1.669 euros to 1.794 euros per liter.

Significance of the Strait of Hormuz

The Strait of Hormuz ranks among the most important routes for global oil and gas trade. Even minor supply disruptions in this region can noticeably move prices on international markets. With each additional escalation, analysts see the risk that the already strained supply situation will come under further pressure.

Should the situation intensify in the coming days, observers expect further price increases at fuel stations and a broader burden on the economy. Conversely, a de-escalation in the conflict could quickly send the waiting LNG tankers back onto their routes toward Asia and Europe.