US says it’s clearing Hormuz traffic: Why are oil futures beyond $100?

Oil futures climbed sharply after a weekend of attacks and escalating regional tensions, lifting Brent above $107 and US West Texas Intermediate past $103. The price moves followed an attack on an Iranian-linked vessel in the Strait of Hormuz and a drone strike that temporarily shut Saudi Arabia’s East-West export pipeline. Saudi officials said the pipeline attack originated from Iraq; Riyadh has been using that pipeline to ship oil via the Red Sea while Hormuz is contested.

Washington has publicly reported progress in reopening the strait. US Energy Secretary Chris Wright told reporters that roughly 10 million barrels per day transited Hormuz on average over the past week, about two-thirds or more of pre-crisis volumes, and President Donald Trump said US forces are escorting tankers. Iran has countered those assertions, declaring it controls access to the waterway, issuing warnings about unauthorised routes and establishing a restricted shipping zone.

Independent tanker-tracking and maritime reports paint a more cautious picture. Preliminary data cited by Reuters showed vessel transits through Hormuz fell to single digits over the weekend and remained below a 10-day average of 14 a day; a Reuters snapshot counted 14 transits with four vessels exiting and ten entering. Before February’s escalation, more than 100 ships typically passed the strait each day, carrying an estimated 20 million barrels of oil. Trackers note that figures can understate traffic because some vessels switch off their Automatic Identification System transponders.

Market analysts point to those disruptions, plus attacks by Yemen’s Houthi group on Saudi facilities, in explaining why futures are trading at a premium to spot. Christopher Haines of Energy Aspects warned that oil flows are still notably reduced and that global stock buffers such as the US Strategic Petroleum Reserve have been drawn down. IG Group’s Chris Beauchamp said limited passage through Hormuz and continuing strikes on infrastructure are keeping near-term contracts elevated, and that without the previous supply buffers prices may need to rise further to curb demand.

Beyond tanker incidents in Hormuz, the Saudi pipeline outage poses an additional strain: Riyadh’s use of the East-West line to move exports via the Red Sea is designed to bypass the contested strait, and officials warned that up to 4% of global oil supply could be at risk if the pipeline remains shut. Maritime authorities also reported separate assaults: the UK Maritime Trade Operations centre said a vessel was struck by an unknown projectile while transiting Hormuz, and Iran’s Islamic Revolutionary Guard Corps said it intercepted and destroyed an MQ-1 drone over the waterway. With diplomatic contact limited and attacks continuing, analysts say the market is likely to stay under upward pressure in the near term.