Crude slips despite Middle East strikes as tankers maintain transit routes
Crude oil prices fell slightly as traders prioritized continued tanker movements through the Bab el-Mandeb Strait over escalating military strikes, signaling market resilience to regional supply threats.
Brent crude traded at $89.46 per barrel and West Texas Intermediate at $83.54, both declining roughly 1 percent from Wednesday’s close. The dip occurred despite renewed military strikes between the United States and Iran and a drone attack on a tanker in Egypt.
U.S. Central Command announced Wednesday that it conducted renewed strikes on Iranian targets. The command stated, “The strikes are a powerful response to yesterday's attempted Iranian attacks on U.S. forces based in the Middle East.” Concurrently, Iran fired missiles at U.S. troops stationed in Jordan.
U.S. and Saudi forces also targeted Iran-aligned military groups in Iraq that were allegedly planning attacks on Saudi energy infrastructure. In Egypt, authorities confirmed a drone strike on a U.S.-owned tanker used for floating storage at the Damietta port, a key liquefied natural gas terminal, with later reports indicating two LNG tankers were hit.
Rather than pricing in immediate supply shocks, traders focused on shipping data showing 39 commodity carriers exiting the Bab el-Mandeb Strait on Tuesday. This continued flow suggests that market participants believe alternative routing can mitigate the impact of regional hostilities on global energy supplies.
IG Group analyst Tony Sycamore stated, “While overall volumes are reduced, oil continues to leak out of the region through multiple channels, and additional workarounds are being explored. The longer this situation persists, the more these alternative routes and methods will erode Iran's leverage over the Strait of Hormuz.”
ING commodity strategists warned in a Wednesday note that “with Saudi oil infrastructure increasingly targeted, the risk of more prolonged supply disruptions grows.” They emphasized that this threat is especially pronounced in middle distillates, where crack spreads continue to break records.
The market’s muted reaction underscores a growing adaptation to Middle East volatility. Investors are currently betting that logistical workarounds will prevent localized conflicts from triggering a broader energy crisis, even as traffic through the Strait of Hormuz remains subdued.
