LONDON, July 9, 2026, 11:56 BST – Brent crude oil edged lower on Thursday, trading just below the $78 mark as renewed geopolitical tensions between the United States and Iran failed to trigger a sustained rally. Front-month Brent settled at $78.11, up 9 cents, while U.S. West Texas Intermediate slipped 3 cents to $73.49. The market is pricing in uncertainty rather than an outright supply disruption, with traders cautiously eyeing the Strait of Hormuz, a vital chokepoint for roughly one-fifth of global oil and LNG flows.
The latest flare-up followed U.S. Central Command’s announcement that it struck over 80 targets in Iran on July 7, after three commercial vessels came under attack in the strait. The strikes targeted air-defense systems, coastal radar, anti-ship missile sites, and more than 60 small boats operated by the Islamic Revolutionary Guard Corps. Despite the escalation, market participants largely shrugged off the news, with no signs of panic buying or a rush to cover short positions.
“Traders see things as very much up in the air,” said Tim Waterer of KCM Trade. Aneeka Gupta from WisdomTree noted that Brent retains a “mild upward bias,” but the commodity’s gains were capped by a broader supply recovery narrative. Brent closed Wednesday up 5.2% at $78.02, its highest since June 19, while WTI rose 4.4% to $73.52. Both benchmarks retreated from intraday highs after President Donald Trump stated he would not pursue a full-scale war with Iran.
Jorge Leon of Rystad Energy commented that the latest military actions “significantly weaken any confidence” in the fragile truce, but the market’s reaction was muted. The U.S. Energy Information Administration reported a 3.0 million barrel build in commercial crude inventories to 411.4 million barrels for the week ending July 3, while gasoline stocks fell by 1.9 million barrels and distillate inventories—including diesel and heating oil—dropped by 5.0 million barrels.
Adding to supply-side pressure, Russia implemented a ban on diesel exports effective until July 31, following Ukrainian drone strikes on domestic refineries that tightened local fuel supplies. Abhishek Kumar of Sparta Commodities called the ban “almost the worst possible time,” as it compounds existing concerns over refined-product availability amid Middle East shipping risks.
The overall outlook remains tilted to the downside, as Gulf supply shows signs of recovery. In its July report, the EIA slashed its Brent forecast for the third quarter to $74 per barrel, a sharp $27 reduction from its June estimate, and now sees prices falling to $65 in 2027, citing an expected build in oil inventories next year. OPEC+ is adding further pressure, having agreed to lift output targets by 188,000 barrels per day starting in August, though Reuters noted that most of that increase has yet to materialize due to Hormuz disruptions holding back exports from major Gulf producers.
UBS analyst Giovanni Staunovo emphasized that the near-term focus is on “how many tankers will manage to cross” the strait. WTI, the U.S. benchmark, remains influenced by local stockpiles and refinery demand, while diesel prices have become a more immediate headache for shippers and refiners, as Russian export controls combine with security fears in Middle East shipping lanes to squeeze supply.
The risks are clear and tough. If diplomatic talks break down, tanker attacks escalate, or insurers scale back coverage, the market could shift from pricing fear to pricing actual supply loss. Samer Hasn of XS.com said the “diplomatic path to settlement is still very long.” For now, traders are pricing uncertainty, not a closed strait, leaving oil suspended between the risk of a sudden Hormuz premium and a supply recovery that keeps dragging Brent back toward the mid-$70s.
