Oil prices jumped approximately 7% on July 29 as renewed military strikes across the Middle East revived fears that global petroleum supplies could face another severe disruption.
Brent crude, the international benchmark, rose $6.33 to $90.42 a barrel by 1:50 p.m. Eastern Time, an increase of 7.53%. US West Texas Intermediate gained $5.26, or 6.64%, to reach $84.52 a barrel. The movement followed an abrupt return to hostilities involving Iran, the United States, Saudi Arabia and Tehran-aligned armed groups.
The surge was especially dramatic because oil had fallen sharply only one day earlier. Brent dropped 4.8% to $84.09 on July 28 as traders briefly hoped that a pause in US-Iran attacks might lead to negotiations. It had lost approximately 16% across three sessions before the latest violence reversed market sentiment.
The rapid shift demonstrates how oil is currently responding less to ordinary changes in consumption and more to every military, diplomatic and shipping development in the region.
US and Saudi Forces Struck Iran-Backed Groups in Iraq
The immediate trigger was a new exchange of attacks across several countries.
US and Saudi forces launched airstrikes against Iran-backed armed groups in Iraq, accusing them of involvement in drone attacks on Saudi oil facilities. The operation came after the US military said it had prevented an Iranian surprise attack against American troops stationed in the region.
Iran said it had launched missiles towards US bases in Jordan and had fired on vessels moving through the Strait of Hormuz. Explosions also struck an Egyptian natural-gas loading port on the Mediterranean coast. Maritime security company Ambrey said a US-owned floating storage tanker at the site had been hit by a drone.
Each incident increased the possibility that the conflict could damage oil infrastructure, interrupt tanker movements or draw additional governments into direct combat.
Oil traders frequently react before physical supplies are lost. Prices rise because buyers begin paying a risk premium for the possibility that future deliveries may be delayed or unavailable.
Trump’s Threat of More Strikes Accelerated the Rally
Prices moved higher after US President Donald Trump promised additional military action against Iran during a television interview.
The statement suggested that the latest attacks might not remain an isolated exchange. A longer campaign could place Iranian ports, missile sites and coastal infrastructure at risk while increasing the likelihood of retaliation against US bases, Gulf energy facilities and commercial shipping.
Washington also introduced another round of sanctions targeting what the US Treasury described as Tehran’s attempt to monetise control of the Strait of Hormuz. The measures covered ten entities and eight additional tankers associated with Iranian maritime activity.
Threats, sanctions and airstrikes affect prices differently, but together they increase uncertainty. Traders must consider not only how much oil is being produced but whether that oil can be transported, insured, financed and delivered safely.
The Strait of Hormuz Remains the Market’s Greatest Concern
The Strait of Hormuz is the narrow maritime passage connecting the Persian Gulf with the Gulf of Oman and the wider Indian Ocean. Before the war, approximately one-fifth of the world’s petroleum liquids moved through it.
The US Energy Information Administration’s analysis of global oil chokepoints estimated that an average of 20.9 million barrels per day passed through Hormuz during the first half of 2025. That represented around 20% of worldwide petroleum-liquids consumption and one-quarter of globally traded seaborne oil.
There are limited alternatives. Saudi Arabia and the United Arab Emirates can redirect some supplies through pipelines leading to ports outside the Persian Gulf, but those routes cannot fully replace Hormuz’s normal capacity.
Shipping data cited by Reuters showed that only a small number of commodity vessels had used the strait during the week of the latest attacks. Iran also rejected an Omani proposal for regional joint management of the passage, reducing hopes for a rapid diplomatic reopening.
Even without the physical destruction of an oil field, reduced tanker traffic can prevent producers from exporting their output and eventually force them to shut down wells or reduce refinery activity.
The Red Sea Is Becoming a Second Chokepoint
Saudi Arabia and other producers have attempted to bypass Hormuz by sending more oil westwards towards Red Sea ports. That strategy has become more difficult as Yemen’s Houthi movement threatens vessels near the Bab el-Mandeb Strait.
Bab el-Mandeb connects the Red Sea with the Gulf of Aden. Ships passing through it can reach the Suez Canal and Mediterranean markets without sailing around Africa.
The Houthis have announced actions against Saudi shipping and are reportedly considering charging fees to commercial vessels using the southern Red Sea. China has held direct discussions with the group in an attempt to protect Chinese tankers, according to sources cited by Reuters.
Earlier Houthi attacks on Saudi tankers pushed Brent above $100 a barrel on July 23. Analysts estimate that Hormuz and Bab el-Mandeb together normally carry the equivalent of roughly one-quarter of global oil supply.
Pressure on both routes creates a more serious problem than disruption at either passage alone. Oil redirected away from the Persian Gulf may still encounter danger while travelling through the Red Sea.
Falling US Inventories Added to Supply Anxiety
Geopolitical risk was not the only reason prices rose.
US commercial crude inventories fell by 7.2 million barrels during the latest reporting week, reaching 404.5 million barrels. That was the lowest level recorded since 2018 and substantially exceeded analysts’ expected decline of 1.3 million barrels.
Inventories act as a buffer between daily production and consumption. When stockpiles are high, refiners can continue operating through temporary import disruptions. When they are low, an interruption becomes more difficult to absorb.
Strong US petroleum exports and steady domestic demand contributed to the reduction. International buyers have increasingly looked towards American crude and refined fuels as Middle Eastern supplies became less predictable.
The EIA previously reported that US crude and petroleum-product exports reached a record in April as the disruption of Hormuz increased global demand for American supply. Crude exports alone averaged 5.6 million barrels per day during that month.
Lower inventories do not necessarily mean that the United States is about to run out of oil. They do mean that the market has less flexibility if military action interrupts imports or raises overseas demand further.
OPEC+ May Stop Increasing Production
Expectations surrounding OPEC+ also supported prices.
The producer alliance is likely to pause its planned production increases for three months beginning in October, according to sources familiar with its discussions. The pause would follow the scheduled return of barrels that had previously been removed through voluntary cuts.
OPEC+ could theoretically respond to high prices by releasing more oil, but the situation is complicated. Several member countries depend on routes affected by the conflict, while producing additional crude provides little benefit when tankers cannot transport it safely.
The group must also balance market stability against the risk of creating excess supply should the war suddenly ease and Hormuz reopen.
That uncertainty is one reason analysts expect continued volatility rather than a steady rise. DBS Bank’s head of energy research said Brent could move repeatedly between $80 and $100 as fighting intensifies and subsides.
Consumers May Feel the Effects Through Fuel and Transport Costs
A one-day rise in crude prices does not immediately translate into an identical increase at petrol stations. Retail prices also depend on refining costs, taxes, distribution, currency movements and existing fuel inventories.
However, sustained increases normally feed into petrol, diesel, aviation fuel and shipping costs. Diesel can be particularly sensitive because it is widely used by trucks, agricultural machinery, factories and backup generators.
The International Energy Agency has warned that the Middle East conflict has already produced unusually severe supply disruption. Its report on protecting economies from oil shocks noted that approximately 15 million barrels of crude and five million barrels of oil products normally crossed Hormuz each day before flows slowed dramatically.
Higher transportation expenses can raise food and manufactured-goods prices even in countries that import relatively little Middle Eastern crude directly. Airlines may add fuel surcharges, freight companies may increase rates and governments may face pressure to subsidise household energy costs.
Higher Oil Prices Could Complicate Interest-Rate Decisions
Energy prices also influence inflation.
When crude becomes more expensive, businesses pay more to move goods and operate energy-intensive equipment. Households spend a larger share of their income on transport and utilities, leaving less money for other purchases.
The latest oil surge occurred as the US Federal Reserve decided to keep interest rates unchanged. Investors had been debating whether renewed energy inflation could eventually force policymakers to raise rates despite concerns about economic growth. The rise in crude contributed to pressure on shares and government-bond markets during the session.
Central banks usually look beyond brief commodity-price movements. A temporary spike may fade before it materially changes underlying inflation. A prolonged conflict that holds Brent near or above $100 would create a more difficult policy problem.
Raising rates could restrain inflation but would also increase borrowing costs for businesses and households. Leaving rates unchanged could allow energy-related price pressure to spread more widely.
The 7% Jump Reflects Fear More Than Confirmed Supply Losses
The latest rally does not mean that 7% of world oil production disappeared in one day. It reflects the price of uncertainty surrounding supply routes, military escalation and future availability.
Markets are attempting to calculate several risks simultaneously: whether US strikes will expand, whether Iran will obstruct Hormuz more aggressively, whether the Houthis will disrupt Red Sea shipping and whether Saudi facilities will suffer further damage.
A ceasefire or credible maritime agreement could send prices down as quickly as they rose. That occurred on July 28, when hopes for diplomacy produced a 5% decline. Renewed attacks reversed the move within hours.
The central issue is therefore not one day’s price movement. It is the growing vulnerability of two maritime routes that carry a substantial share of global energy supplies.
Until shipping through Hormuz and Bab el-Mandeb becomes safer and more predictable, oil prices are likely to remain highly sensitive to every strike, missile launch and diplomatic statement emerging from the region.
