US strikes Iran over tanker attacks, oil jumps and tankers turn back from Hormuz

U.S. strikes Iran after tanker attacks

The U.S. Central Command said on Tuesday it completed a new round of strikes on Iran, hitting over 80 targets including air defense systems, command networks, coastal radar sites, anti-ship missile capabilities, and more than 60 Islamic Revolutionary Guard Corps small boats in and near the Strait of Hormuz. The strikes came after three commercial vessels were hit by projectiles in the waterway, prompting Washington to revoke a license allowing Iran to sell oil. The U.S. military warned it was "postured and prepared to hold Iran accountable" for any breach of the ceasefire.

U.S. forces struck Iranian air defense systems, command and control networks, coastal radar sites, anti-ship missile capabilities, and more than 60 Islamic Revolutionary Guard Corps small boats in and near the strait (of Hormuz) to degrade Iran's ability to continue attacking international commerce flowing through the international trade corridor.

Iran's top military command called the strikes a "blatant act of aggression" and vowed a "crushing response," asserting that Tehran would not permit U.S. interference in the management of the Strait. The war, which began when the U.S. and Israel attacked Iran on February 28, has killed thousands and displaced millions.

Tanker traffic thrown into chaos

At least four oil and gas tankers turned back from the Strait of Hormuz after the attacks, according to ship-tracking data from Kpler and LSEG. Three QatarEnergy-controlled LNG carriers, Al Ghariya, Duhail and Al Ruwais, were heading west toward the strait to load at Ras Laffan before reversing course late Tuesday. An Indian-flagged tanker carrying 2 million barrels of Kuwaiti crude also made a U-turn off Oman on Wednesday. Only two vessels, the VLCCs Tenjun and Pertamina Pride, managed to exit the strait carrying Qatari and Saudi crude loaded weeks earlier.

Vortexa analysts reported a queue of more than 10 empty vessels waiting at Ras Laffan, and over 50 QatarEnergy and ADNOC ballast ships stationed across the Middle East Gulf, India and the Malacca Strait, some with their transponders off for over 10 days. Since the conflict began in late February, only 16 LNG cargoes from Ras Laffan and 10 from ADNOC's Das Island have made it through the strait, a fraction of the typical 7 million metric tons per month.

Oil and broader markets react

Brent crude futures climbed 2.6% to $76.12 a barrel early Wednesday, while U.S. WTI rose 2.6% to $72.26. The rally extended a 3% gain from Tuesday, after oil prices had tumbled to pre-war levels following last month's ceasefire and traders had built up record short positions.

The current conflagration is a reminder to the market of how fragile passage through the Strait still is. This presents a contrary indicator to the prevailing sentiment that the market could be flooded into oversupply, which may scare some of the record short positioning to cover.

While the revocation doesn't fundamentally change oil market dynamics, it's important from a sentiment perspective. It heightens the risk of a breakdown in the temporary deal between the U.S. and Iran.

The safe-haven dollar index climbed to 101.18, its highest since July 2, while the 10-year U.S. Treasury yield rose to 4.565%, a one-month high, as higher oil prices stoked inflation fears. Markets priced in a 67% probability of a Federal Reserve rate hike in September, up from 57% the previous day. Gold slipped to $4,100 an ounce, pressured by rising yields. Asian stocks wobbled, with South Korea's KOSPI index losing 5% and triggering a trading halt.

Ceasefire unraveling

The truce signed last month between the U.S. and Iran has been severely tested. Qatar blamed Iran for a drone strike that caused a fire on one of its LNG tankers; a Saudi-flagged crude carrier was also damaged off Oman. Iran denied responsibility but ordered ships to use a route closer to its coast, signaling its control over the waterway.