Oil prices strengthened again during Monday's trading (August 17) following sharp gains last week. Brent crude rose approximately 0.9% to US$89.28 per barrel, while WTI gained about 0.2% to reach US$82.60. The market continues to price in a high risk premium due to uncertainty surrounding US-Iran diplomacy and increasingly restricted shipping activity in the Strait of Hormuz.

Disruptions in the Strait of Hormuz have become a primary concern following attacks on several tankers and the ongoing US naval blockade of Iranian ports. Shipping data indicates that only five commodity vessels passed through on Saturday, with none transiting the strait on Sunday—a stark contrast to the dozens of ships seen the previous weekend and the more than one hundred vessels per day recorded before the conflict erupted.

Diplomatic tensions show no signs of easing. Iran's Foreign Minister reiterated that Tehran is not engaged in direct talks with Washington, while the US has threatened to intensify economic pressure to force Iran back to the negotiating table. Consequently, the prospect of normalizing energy flows through Hormuz remains uncertain.

These supply risks are currently outweighing

These supply risks are currently outweighing negative sentiment regarding demand. Although both OPEC and the IEA have lowered their dunia oil demand growth forecasts for 2026, the market remains focused on the threat of supply disruptions from the Middle East. Pressure is particularly acute for refined products—especially diesel—driven by refinery outages, shipping bottlenecks, and tightening supplies.

The Russia-Ukraine conflict is adding further pressure, as Ukrainian attacks continue to target Russian oil infrastructure. The combination of disruptions in the Gulf and Russia has heightened concerns that energy product availability could tighten further in the coming months.

Newsmaker Analysis: As long as traffic through Hormuz remains severely restricted and US-Iran talks remain stalled, Brent crude has the potential to maintain momentum around the US$90 mark. However, a weakening internasional demand outlook continues to act as a drag on the rally. If shipping disruptions worsen, the risk of a rise to higher levels re-emerges, whereas diplomatic progress could trigger rapid profit-taking. (arl)