Oil Prices Rise 1% as Hormuz Shipping Attacks Threaten Iran Truce Hopes
Oil prices rebounded on Wednesday after falling to two-month lows in the previous session, as renewed attacks on commercial shipping in the Strait of Hormuz raised concerns about energy supply security and weakened optimism over a possible de-escalation in the US-Israeli war on Iran.
Brent crude futures rose by $1.04, or 1.1%, to $92.53 a barrel, while US West Texas Intermediate (WTI) crude gained 67 cents, or 0.8%, to $86.71 a barrel at 0420 GMT on November 11, according to Reuters.
The recovery followed a decline of more than $3 a barrel during the previous session, when oil markets initially responded to comments from US officials that appeared to reduce expectations of further military strikes against Iran. Prices subsequently recovered some of those losses after an Iranian security official said that no talks were taking place between Washington and Tehran.
The latest price movement reflects uncertainty over the direction of the conflict and the extent to which diplomatic developments could restore normal shipping through the Strait of Hormuz. While expectations of a possible agreement have put downward pressure on crude prices, continued attacks on vessels have maintained concerns about the movement of oil through the region.
Tanker attacks keep Strait of Hormuz risks elevated
Shipping security has become a major factor influencing oil-market sentiment as attacks on commercial vessels continue across the Strait of Hormuz and surrounding Gulf waterways.
Data from the Washington Institute for Near East Policy showed that 37 ships were attacked during October, the highest monthly total since the beginning of the Middle East war. The latest developments have provided little indication that the frequency of attacks has declined significantly in November.
A tanker was struck northeast of Lima in Oman on Tuesday, according to the United Kingdom Maritime Trade Operations (UKMTO) agency. In a separate statement, Iran’s Revolutionary Guards Navy said that two tankers had caught fire after hitting naval mines while travelling along what it described as an unauthorised route through the strait.
The incidents have added to concerns among shipping operators about the safety of commercial vessels travelling through one of the world’s most important energy transportation corridors.
The Strait of Hormuz connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. It is a major export route for crude oil and petroleum products from several Middle Eastern producers. Disruptions to shipping through the waterway can therefore affect the movement of energy supplies to international markets.
The latest attacks have also complicated expectations that a diplomatic agreement between the United States and Iran could quickly improve shipping conditions. Even if an agreement is reached, commercial vessel movements may not immediately return to normal.
LSEG Oil Research said in a November 10 note that the recovery of shipping flows would depend on several factors, including the clearance of naval mines, insurance costs and whether shipowners were willing to accept the risks associated with transiting the waterway.
These considerations could delay the return of normal shipping activity even after a reduction in military tensions. Shipping companies may require additional security assurances and clearer information about navigation risks before restoring regular routes and schedules.
Diplomatic uncertainty adds to oil price volatility
Oil markets have been responding to changing expectations about the possibility of a diplomatic settlement between Washington and Tehran.
In the previous trading session, crude prices initially declined by more than $3 a barrel after US officials downplayed the likelihood of further military strikes against Iran. The market subsequently recovered part of those losses after an Iranian security official said that no negotiations were taking place between the two countries.
The contrasting signals have made it difficult for traders to assess whether the conflict is moving towards de-escalation or whether further military and shipping disruptions remain possible.
June Goh, senior analyst at Sparta Commodities, said the increase in vessel attacks in Gulf shipping lanes was taking place amid uncertainty surrounding diplomatic discussions.
She also pointed to the possibility of increased crude flows from the Middle East and the political environment following the US midterm elections as factors contributing to more bearish sentiment in the oil market.
Goh said the extent to which Iran would engage with US demands for a diplomatic agreement remained a key factor influencing oil prices.
The competing influences have created a market in which expectations of improved diplomatic relations can reduce the risk premium attached to crude prices, while renewed attacks on shipping can quickly reverse that movement.
For oil traders and energy companies, the timing and conditions of any agreement are therefore as important as the announcement of a potential settlement.
Shipping costs and insurance could delay supply recovery
The risks surrounding the Strait of Hormuz extend beyond the possibility of a temporary interruption to tanker movements.
Shipping companies must consider vessel safety, crew protection, insurance coverage, navigation restrictions and the availability of alternative routes when operating in high-risk maritime areas.
An increase in attacks can lead to higher operating costs for shipowners and potentially affect the commercial decisions of tanker operators. Insurance requirements may also change as security conditions deteriorate, adding further uncertainty to freight costs.
The possibility of naval mines creates another operational challenge. Even after hostilities decline, the identification and clearance of mines could be necessary before shipping companies consider some routes sufficiently safe for regular commercial operations.
This means that a diplomatic agreement would not necessarily result in an immediate increase in crude oil shipments through the strait.
For energy importers, refiners and commodity traders, the distinction between a political agreement and the restoration of reliable shipping is important. Crude availability depends not only on production but also on the ability to transport cargoes safely and consistently to receiving markets.
The longer shipping uncertainty persists, the greater the potential for changes to tanker schedules, freight arrangements and delivery expectations.
US crude inventories provide a contrasting market signal
Developments in the United States are also influencing the outlook for oil prices.
US crude oil inventories increased by 9 million barrels during the week ended November 6, according to market sources citing data from the American Petroleum Institute (API).
An increase in crude inventories can indicate that more oil is available within the US market than was previously expected. Depending on the reasons behind the build-up, higher stocks can weigh on prices by reducing concerns about immediate domestic supply availability.
However, the reported inventory increase has to be considered alongside international supply risks. Continued attacks on shipping in the Middle East could support global crude prices even when US stockpiles are rising.
The API figure cited in the Reuters report is based on market sources. It should not be treated as the final US government inventory estimate, which is released separately by the Energy Information Administration.
The difference between domestic inventory developments and international transportation risks illustrates why oil prices can move in response to several factors at the same time.
Russian refining capacity affected by Ukrainian drone attacks
Developments in Russia are adding another element of uncertainty to the global oil market.
Russian oil refining capacity has been reduced by approximately 30% since late October following renewed Ukrainian drone attacks, according to industry sources cited by Reuters.
The reduction in refining capacity could affect the volume of crude processed by Russian facilities and the availability of refined petroleum products. Refinery disruptions can influence the balance between crude exports and product supplies, depending on the extent and duration of operational interruptions.
The reported damage comes as Russia and Ukraine hold renewed diplomatic discussions in Abu Dhabi. Officials from both countries met on Tuesday for their first peace talks since February, as US President Donald Trump’s envoys pursued a fresh effort to end the war.
The talks introduce another potential influence on energy markets, particularly if an agreement eventually reduces attacks on energy infrastructure.
However, the meeting itself does not establish that a settlement has been reached or that Russian refining operations will return to normal. The extent of any recovery will depend on the condition of affected facilities, repair requirements and the security situation.
The combination of Middle Eastern shipping risks and disruptions to Russian refining demonstrates how geopolitical developments in different regions can influence energy supply expectations simultaneously.
Energy markets face competing supply and demand signals
The latest rebound in crude prices reflects the interaction of several developments rather than a single supply disruption.
On the one hand, expectations of diplomatic progress involving Iran could reduce concerns about prolonged conflict and support the possibility of increased crude shipments from the Middle East. Rising US crude inventories could also contribute to expectations of greater supply availability.
On the other hand, continued attacks on vessels in the Strait of Hormuz, potential mine-related navigation risks and reduced Russian refining capacity are creating uncertainty across the energy supply chain.
These factors affect different parts of the oil market. Crude production, tanker transportation, refinery operations and the availability of petroleum products are connected, but disruptions in one area do not necessarily produce an immediate or uniform effect across the others.
For refiners, traders and energy importers, the reliability of physical deliveries is an important consideration alongside benchmark crude prices. A fall in oil prices does not automatically mean that transportation risks, freight expenses or insurance costs have declined.
The latest developments also underline the importance of monitoring shipping activity and refinery operations when assessing the outlook for crude and petroleum product markets.
What to watch in the coming sessions
The direction of oil prices will depend partly on whether diplomatic developments reduce the security risks affecting commercial shipping through the Strait of Hormuz.
Market participants will also monitor further incidents involving tankers, any restrictions on maritime routes and the progress of mine-clearance operations. Changes in insurance costs and shipowners’ willingness to resume normal transit could provide indications of whether shipping conditions are improving.
In the United States, the next government inventory report will provide a further indication of domestic crude supply conditions. Developments affecting Russian refinery operations will also remain relevant to the availability of refined products.
For now, oil prices are being influenced by opposing forces. Expectations of a diplomatic agreement and stronger supply availability are limiting some of the upward pressure, while attacks on shipping and uncertainty over the restoration of tanker movements continue to support prices.
The recovery in Brent and WTI on November 11 highlights how quickly sentiment can change when security concerns threaten the movement of crude through a major international shipping route.
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