The sound of artillery in the Strait of Hormuz has pushed Brent crude oil back to $83! The risk premium in energy corridors is rising again, and bullish oil traders are reclaiming pricing power.

Following reports from media alleging that Iran struck "hostile targets" in the Strait of Hormuz, the international oil pricing benchmark, Brent crude futures, continued to rise. At the same time, Iranian officials in Tehran are seeking to impose a ban on vessels from the U.S. and other hostile countries from entering this critical waterway as part of a preliminary management agreement with Oman. Brent crude futures have reclaimed a key technical bullish level above $83 per barrel, after surging almost 4% in the preceding trading day; the North American oil pricing benchmark, West Texas Intermediate (WTI), is nearing $78 per barrel. According to the semi-official Fars News Agency, the attacks occurred late Thursday local time, following an explosion near Qeshm Island in the Strait of Hormuz. As illustrated in the chart above, with Iran targeting hostile shipping in the Strait of Hormuz, oil prices have risen once againTehran plans to prohibit U.S. vessels from passing through, and crude futures have significantly narrowed their losses for the week. As of Friday morning, the situation in the Middle East is marked by a contradictory state of "negotiations progressing while risks in the shipping lanes simultaneously escalate." Discussions between Iran and Oman regarding new navigation arrangements aim to restrict U.S. and Israeli vessels from entering the Strait of Hormuz, potentially imposing fines on violators of up to 20% of the cargo's value; Oman is considering a passage fee of about 3%. The U.S. insists on the restoration of unimpeded passage free of charge, with both sides still far from aligning on core conditions. Meanwhile, following the explosion near Qeshm Island, Iran has claimed to have attacked "hostile targets" within the Strait; the Houthi rebels have launched a large-scale missile and drone assault on pro-Saudi forces in Yemen, extending threats to Saudi oil tankers, the Gulf of Aden, and Red Sea shipping routes. Iran has further warned that if the U.S. resumes large-scale attacks, the oil fields, power grid, water infrastructure, and transportation facilities of Gulf countries could be retaliated against, indicating that geopolitical risks in the Middle East are likely evolving from a singular blockade of the Strait to a large-scale regional threat covering energy production, refining, and transportation nodes. Iran plans to ban U.S. and Israeli vessels from passage, as crude bulls reclaim pricing power! The risk premium on energy corridors is heating up again. As market optimism regarding the comprehensive reopening of the Strait of Hormuz and the recovery of energy transport in the Persian Gulf fades, crude oil has recouped some of its earlier losses from the week. Under the proposed Iran-Oman agreement, Tehran also intends to prohibit Israeli vessels from passing through the Strait and requires hostile nations to pay compensation before using the waterway. Rob Haworth, Senior Investment Strategy Director at U.S. Bancorp Asset Management Group, stated, "The agreement to reopen the Strait of Hormuz remains a distant prospect, and investors are in a state of uncertainty. Currently, shipping volumes are still low, and the path to a lasting agreement remains unclear." Despite U.S. President Donald Trump's repeated assertions that he believes the war will "end soon" and describing the situation in the Strait as "making good progress," there remain substantial discrepancies among the parties involved regarding the conditions for reaching an agreement. The U.S. insists on allowing vessels to transit freely and restoring the situation to pre-war conditions, while Iran is pushing for the establishment of a fee-based mechanism. The conflict in the Middle East appears to be widening. Iran-backed Houthi rebels have stated they launched a "large-scale" attack on forces of the pro-Saudi Yemeni government. Earlier this week, the rebel group claimed to have targeted a Saudi oil tanker in the Gulf of Aden and threatened shipping activities in the northern Red Sea. In specific price movements, October Brent crude futures rose by 1.4%, reaching $83.61 per barrel as of 8:15 AM Singapore time. September West Texas Intermediate futures increased by 1.2%, standing at $78.24 per barrel. The reopening of the Strait cannot compensate for the gap in refined oil; the refining sector is regaining control over energy pricing power. In the short term, international oil prices are expected to maintain a typical pattern of "diplomatic messages suppressing prices while military escalations chase gains," with directional momentum significantly weaker than volatility. Brent crude fell to $79.36 per barrel on August 4 due to ceasefire and resuming navigation expectations, but rose again to $83.48 on August 7 due to disputes over transit conditions and safety incidents; during the same period, WTI rebounded from $75.77 to $78.84. These figures indicate that the crude oil market is not currently forming a stable unilateral bull market but is continuously reassessing risk premiums based on actual shipping volumes through the Strait, availability of insurance, and the probability of a U.S.-Iran agreement. As long as shipping in the Strait of Hormuz remains significantly below pre-war levels, there will be strong geopolitical support below Brent prices; if attacks expand to oil fields, ports, or key shipping routes, oil prices may rise sharply. However, if an unconditional agreement for free passage is reached, the risk premium on crude oil will likely retract faster than that of refined products. Even if crude prices fall due to negotiations, diesel and jet fuel prices are more likely to "decrease slowly and rebound quickly," with refining margins remaining sticky at high levels. Some seasoned energy analysts believe that in the coming weeks, refined oil prices at the refining end are likely to be more resilient than crude oil, particularly diesel and jet fuel, which typically outperform gasoline. The core reason behind this is that the reopening of the Strait primarily addresses whether crude oil "can be transported out," but it cannot immediately restore lost refining capacities, refined product inventories, and logistics networks; a sharp decline in diesel exports from Russia, attacks on refineries, while Middle Eastern product exports are obstructed and Chinese exports are restricted, compounded with prolonged high operating rates and prolonged maintenance of refineries, have created structural bottlenecks that are more difficult to repair than crude oil supply. In July, the U.S. 3-2-1 crack spread briefly set a record of $64.58 per barrel, while the European diesel crack spread exceeded $60, and European gasoline maintained a premium of about $41 over crude oil; BP's global refining profit metric averaged about $42 in the third quarter to date, significantly higher than $30 in the second quarter and $12 a year ago. Currently, the more certain logic is not simply to go long on crude oil, but to go long on the scarcity of refined oil and the cash flow elasticity of quality refining assets, highlighting that refined oil prices are more resilient than crude oil, and refining profitability visibility is better than oil price trends; however, the risk of asset price reversals is highly concentrated on the single switch of a peace agreement. During this period, U.S. refiners can often leverage flexible feedstock sources and export capacities to fill global diesel and gasoline gaps; pure refiners like Phillips 66 and Valero typically exhibit greater sensitivity to crack spreads than integrated oil companies; while ExxonMobil, Chevron, and Saudi Aramco achieve a more balanced geopolitical hedge through "upstream oil prices + downstream profits."