Oil Hits $89 as Hormuz Rhetoric Diverges From Tanker Data
0h ago|5 min readStandard
Fazen Markets Editorial Desk
Collective editorial team · methodology
crude-oilstrait-of-hormuzgeopolitical-risk
Fazen Markets Editorial Desk
Collective editorial team · methodology
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Oil prices extended their rally for a sixth consecutive session on August 12, with Brent crude trading above $89 a barrel and West Texas Intermediate near $84. The gains come despite a widening gap between US political rhetoric asserting control over the Strait of Hormuz and physical shipping data showing a continued collapse in tanker traffic. Alongside the energy story, a closely-watched inflation reading came in line with expectations, paring back bets on aggressive Federal Reserve action. The price of the NEAR token, a crypto asset not directly tied to oil, moved to $1.64 as of 20:35 UTC today, gaining 4.31% over 24 hours with a market cap of $2.14 billion.
The Strait of Hormuz is the world's most critical oil chokepoint, with roughly 20% of global oil consumption and a third of seaborne traded oil passing through before the current conflict. A sustained closure would represent the most significant supply shock since the 1973 Arab oil embargo, which saw prices quadruple. The current macro backdrop features cooling US inflation but persistent uncertainty on the Fed's rate path, with the dollar index holding just under the 100 level.
The immediate catalyst for the recent price surge is a war of words between Washington and Tehran over control of the waterway. President Trump has repeatedly claimed "total control" and described a US naval presence as a "wall of steel." Iran's Persian Gulf Strait Authority has rejected this claim, stating the strait remains blocked. The conflict escalated from earlier skirmishes into a formal blockade by Iranian forces in late July, which initially saw transit drop from a pre-war norm of 130 vessels daily to the low teens.
This geopolitical tension is unfolding as markets assess the durability of the disinflation trend. The July CPI report provided some relief, but Federal Reserve Chair Kevin Warsh's refusal to offer forward guidance after a July meeting that saw three dissents in favor of tightening has kept monetary policy expectations genuinely two-sided. This creates a market simultaneously pricing near-term calm on rates and building tension in energy.
The data reveals a stark divergence between political claims and on-the-ground reality. Brent crude has gained for six straight days, rising roughly 12% over the past five sessions to trade above $89. WTI follows closely near $84. This price action embeds a significant geopolitical risk premium.
Physical shipping metrics contradict US assertions of control. Tanker transits through the Strait of Hormuz fell to a one-week low of approximately eight vessels per day, according to tracking data. This compares to a pre-conflict daily average near 130, representing a collapse of over 90% in commercial traffic.
| Metric | Pre-Conflict Level | Current Level | Change |
|---|---|---|---|
| Daily Tanker Transits | ~130 | ~8 | -94% |
| Brent Crude Price | ~$78 (pre-blockade) | >$89 | +14%+ |
On the inflation front, July's headline CPI matched forecasts at 3.4% annually, down a tenth from June. Core CPI registered 2.5% annually. Equity markets read this as a modest positive, with the S&P 500 closing near record highs and the Nasdaq outperforming, though the Dow Jones Industrial Average lagged. The NEAR token's 24-hour trading volume was $178.41 million.
The primary second-order effect is a bifurcated market response. Energy sector equities, particularly integrated majors with diversified global production like ExxonMobil (XOM) and Chevron (CVX), benefit from higher realized prices while being somewhat insulated from specific regional supply disruptions. Pure-play shale producers like Pioneer Natural Resources (PXD) also gain from higher WTI benchmarks. Conversely, airlines (JETS ETF), shipping companies, and heavy industrials face margin compression from elevated input costs.
A key counter-argument is that the current risk premium may be excessive if diplomatic channels quietly reopen the strait sooner than expected. The physical demand picture outside of Asia remains soft, and global inventories are not at critically low levels, which could cap the upside for oil prices if the geopolitical trigger is removed.
Positioning data shows institutional money flowing into energy futures and options, building long exposure to the crude complex. Flow is also moving into energy sector ETFs and out of rate-sensitive sectors like utilities, as traders bet the Fed will tolerate slightly higher inflation driven by supply shocks. The NEAR token's 4.31% gain amid broader market calm suggests some crypto flows are acting as a sentiment hedge against geopolitical instability.
The immediate catalyst is the release of July's Producer Price Index (PPI) data on Thursday, August 13. Given oil's recent run, the input price reading carries more weight than usual for gauging pipeline inflationary pressures. Any further statements from US or Iranian officials regarding the status of the Strait of Hormuz will directly impact the intraday risk premium.
Traders are watching key technical levels for Brent crude, with $90 acting as a major psychological resistance level. A sustained break above could target the $95 zone seen during prior Middle East crises. On the downside, a close below $85 would signal the risk premium is unwinding. For the broader market, the S&P 500's ability to hold above 5,500 will test whether the "goldilocks" narrative of cooling inflation and stable growth can persist alongside rising energy costs.
A sustained blockage would inevitably push US retail gasoline prices higher, but with a lag. The US imports very little crude directly from the Gulf, but a global price spike affects all benchmarks. Refining margins would likely expand initially as product inventories are drawn down, but sustained high crude costs would eventually compress them. Historical analogues like the 2019 tanker attacks saw a 15% spike in Brent, which translated to a roughly 10-15 cent per gallon increase at the pump over the following month.
The in-line CPI report has reduced the probability of a September rate hike in fed funds futures markets, but it has not eliminated it. The more significant factor is Federal Reserve Chair Kevin Warsh's refusal to provide forward guidance, which leaves the decision data-dependent. The three dissents in July show a hawkish faction exists. The upcoming PPI report and August jobs data will be critical final inputs before the September FOMC meeting.
Modern, sustained blockades of the Strait of Hormuz are rare. The most direct precedent is the 1984-87 "Tanker War" during the Iran-Iraq conflict, which saw attacks on shipping but not a complete cessation of traffic. That period saw volatility in oil prices, but the market adapted with increased use of pipelines and alternative routes. A complete closure has never been successfully executed long-term due to the immense global economic and military pressure it triggers, typically leading to a diplomatic or military resolution within weeks.
The gap between political rhetoric over Hormuz and collapsing tanker data is the tangible driver keeping a risk premium in oil prices above $89.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.
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