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Sunday, July 26, 2026

Oil markets brace for prolonged squeeze as Hormuz blockage deepens

By Vijay Valecha in 'Century in News'

Oil markets brace for prolonged squeeze as...

Vijay Valecha, Sun, July 26, 2026 Khaleej Times

Crude prices swing wildly and Gulf exports collapse 82% as the Iran conflict reroutes global oil flows, with traders now pricing in a formal toll on the Strait of Hormuz

Global oil markets are being reshaped by a supply shock unlike anything seen in decades, as the ongoing conflict involving Iran chokes off the world’s most important crude artery and forces exporters into costly, improvised workarounds.

Crude posted one of its sharpest rallies in years in the most recent session, with WTI gaining 6.81 per cent and Brent surging 5.76 per cent to briefly punch through $100 a barrel, before easing back to consolidate. “The rally was primarily driven by escalating geopolitical tensions after Iran-backed Houthi militants claimed they had attacked Saudi oil tankers in the Red Sea, raising concerns over another major disruption to global energy supplies,” said Vijay Valecha, Chief Investment Officer at Century Financial. He noted the attack “threatens a key alternative shipping route to the Strait of Hormuz, forcing cargoes destined for Europe to take the much longer route around South Africa.”

Valecha added that markets are not yet fully pricing the risk. Citing JP Morgan estimates, he said global oil supply has fallen by 11.1 million barrels a day since the conflict began, while demand has dropped 5.1 million barrels a day on weaker Chinese crude imports and petrochemical activity — a demand slump that has “helped prevent an even sharper rise in oil prices.” Technically, he flagged $91 as key support and $94.50 as the level that would open the door toward $99.

Source

Khaleej Times

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