Brent Crude Rises as Gulf Tensions Revive Supply Fears

Key Moments

Escalating Tensions Drive Oil Price Rally

ING analysts Warren Patterson and Ewa Manthey report that ICE Brent has surged as geopolitical risk in the Persian Gulf has increased, reviving fears over the security of oil supplies from the region. The analysts point to renewed conflict dynamics between the U.S. and Iran and an associated rise in perceived supply vulnerability.

According to their note, ICE Brent rallied 5.8% in the previous session, with the benchmark settling above $114/bbl amid signs that the ceasefire between the U.S. and Iran is starting to fray.

The analysts write: “We are seeing the first signs of the ceasefire between the US and Iran breaking down amid a re-escalation in the Persian Gulf. ICE Brent rallied 5.8% yesterday to settle above $114/bbl. The US struck a number of Iranian boats.”

Attacks on Regional Infrastructure Heighten Supply Concerns

Patterson and Manthey underscore that Iran has resumed attacks on infrastructure in surrounding countries, further amplifying supply risk perceptions. They note that the United Arab Emirates intercepted several Iranian missiles and that Fujairah port was hit by a drone.

They emphasize the strategic significance of Fujairah for UAE crude flows: “In addition, Iran has resumed attacks on infrastructure in neighbouring countries, with the UAE intercepting several Iranian missiles, while Fujairah port was hit by a drone. This port is important for UAE oil exports. It is situated outside the Strait of Hormuz, which allowed oil exports to continue (and, in fact, to increase) despite the war and blockade of the Strait.”

“Project Freedom” and Risks Around the Strait of Hormuz

The ING report highlights that these developments are unfolding just as the U.S. has begun escorting commercial shipping through the Strait of Hormuz under an initiative referred to as “Project Freedom.” The analysts flag that this measure, while intended to safeguard navigation, could also contribute to further tensions.

They note that, as part of this plan, two U.S.-flagged commercial vessels have already transited the Strait under U.S. guidance. As cited in the note: “This re-escalation comes at a time when the US has started guiding commercial vessels through the Strait of Hormuz, under “Project Freedom”. Two US-flagged commercial vessels have passed through the Strait of Hormuz under the plan, according to the US. Clearly, continuation of “Project Freedom” risks further escalation.”

Market Sentiment and Outlook

The analysts suggest that oil markets might experience a short-lived easing in risk premiums following remarks from President Trump. They observe that comments indicating the conflict could persist for another two to three weeks may temporarily temper some of the most acute concerns.

However, they caution that investor confidence in such timelines is limited: “Markets may find some relief today following President Trump’s overnight comments suggesting the conflict could continue for another two to three weeks. However, markets are likely to view this with considerable scepticism, given the recent escalation and the repeated extensions of projected timelines for ending hostilities since the conflict began.”

ING concludes that, with tensions in the Persian Gulf again intensifying and the security of critical energy infrastructure under renewed threat, Brent prices are likely to remain highly sensitive to any further escalation in the region.