Mumbai, July 30 : Oil prices declined on Thursday after a sharp rally in the previous session, as crude shipments continued to move out of the Middle East despite worsening geopolitical tensions and the expansion of the U.S.-Iran conflict.
Brent crude futures dropped $1.29, or 1.42%, to $89.45 per barrel by 0110 GMT, while U.S. West Texas Intermediate (WTI) crude slipped 56 cents, or 0.66%, to $83.90 per barrel. The decline followed a major surge in the previous session, when Brent jumped nearly 8% and WTI gained over 6% amid renewed concerns about supply disruptions.
The recent price movement highlights the uncertainty gripping global energy markets as traders assess the impact of ongoing military tensions, shipping disruptions, and efforts to maintain crude flows through alternative channels.
Tanker Activity Offers Some Relief to Oil Markets
Despite the escalation in the conflict, shipping data indicated that commercial vessels were still operating through key maritime routes. Preliminary reports showed that 39 commodity ships passed through the Bab el-Mandeb Strait into the Red Sea on Tuesday, marking the highest level since July 19.
However, only a limited number of vessels were reported to have crossed the Strait of Hormuz, one of the world’s most critical energy corridors. The reduced traffic through the waterway continues to raise concerns over the stability of global oil supplies.
Market analysts said that while overall shipment volumes remain lower, crude exports from the region have not completely stopped.
“Oil continues to move through several channels, while companies are exploring alternative routes to reduce risks,” analysts noted, adding that prolonged disruptions could gradually weaken Iran’s ability to influence energy flows through the Strait of Hormuz.
Strait of Hormuz Remains at the Centre of Supply Concerns
The Strait of Hormuz has long been considered a vital artery for global energy trade, with a significant share of worldwide oil and natural gas shipments traditionally passing through the narrow waterway.
Since the beginning of the U.S.-Iran conflict in February, shipping activity through the strait has been heavily affected, despite diplomatic efforts to restore safe passage for commercial vessels.
Iran has rejected a proposal from Oman for joint regional management of the waterway, according to a senior Iranian official. The decision has added further uncertainty over the future of maritime operations in the region.
Conflict Expands With New Military Actions
Tensions increased further after U.S. and Saudi forces carried out strikes against Iran-backed paramilitary groups in Iraq. The operation marked Saudi Arabia’s first publicly acknowledged participation in American air strikes against these groups.
The attacks came after drone strikes targeted Saudi oil-related facilities from Iraqi territory, intensifying concerns about possible threats to energy infrastructure across the Gulf region.
Iran also claimed that it had launched attacks on U.S. military bases in Jordan and struck three tankers travelling through the Strait of Hormuz, alleging that the vessels had used unauthorised routes.
Red Sea Shipping Faces Fresh Risks
Meanwhile, Saudi Arabia is reportedly working to create an international coalition aimed at protecting commercial shipping in the Red Sea from attacks by Houthi forces.
The Iran-backed Houthi group in Yemen announced plans to impose a naval blockade targeting Saudi Arabia, threatening further disruptions in the Bab el-Mandeb Strait. The move has raised fears that tanker attacks could expand beyond the Gulf and create additional pressure on global energy supply chains.
The Bab el-Mandeb Strait serves as another major route for international oil transportation, connecting the Red Sea with the Gulf of Aden and serving as an alternative pathway for vessels avoiding regional conflict zones.
Market Outlook Remains Uncertain
Energy markets are closely monitoring developments as traders weigh the possibility of prolonged conflict against signs that crude shipments are continuing through alternative routes.
Although oil prices have eased from their recent highs, analysts warn that any major disruption to tanker movements or attacks on energy infrastructure could trigger renewed volatility.
With geopolitical risks remaining elevated, global oil markets are expected to remain sensitive to military developments, diplomatic efforts, and the ability of shipping companies to maintain operations across critical Middle East waterways.