Oil markets have stayed on alert this week after renewed hostilities involving Iran led to attacks on shipping and a reported slowdown in traffic through the Strait of Hormuz, one of the world's busiest routes for seaborne oil.
On Monday, two oil tankers, one Saudi owned and one South Korean owned, were struck by projectiles as the United States and Iran resumed exchanges of fire in what has been described as a six month long, largely stalemated conflict. The attacks pushed crude oil prices higher, with US crude trading above 91 dollars a barrel earlier in the week, and contributed to a bout of caution across broader financial markets, including a dip in the Nasdaq and the small cap Russell 2000 index.
By Friday, commercial vessels were reported to be anchored off the Iranian port of Bandar Abbas, near the strait, as shipping activity in the area slowed. The Strait of Hormuz is a narrow waterway between Iran and Oman through which a large share of the world's seaborne oil and liquefied natural gas passes, making any disruption there closely watched by energy traders and governments that rely on the flow of tankers through the passage.
Even with the tension, oil prices have not spiked dramatically further as the week has progressed, and analysts have pointed to easing bond yields and a broader market recovery on Thursday as signs that investors do not expect an immediate, sustained disruption to the flow of oil through the region. Still, the situation remains fluid, and further attacks on vessels or infrastructure could quickly change that calculus.
Energy traders will be watching for any further incidents involving tankers or infrastructure near the strait, as well as statements from Gulf governments about the safety of shipping lanes.
Why does the Strait of Hormuz matter for oil prices?
It is one of the world's most important chokepoints for seaborne oil and gas shipments, so any disruption there tends to move global energy prices.
Have oil prices spiked sharply because of this?
Prices rose but have not spiked dramatically further this week, as markets stabilized somewhat by Thursday.