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Oil prices climbed on July 17, with Brent crude futures surging over 12% weekly as tensions between the US and Iran escalated. Iran warned it could instruct Houthis to block the Bab el-Mandeb Strait if the US targeted its energy infrastructure, threatening 7% of global oil flows. The US Energy Information Administration (EIA) also reviewed minimum storage levels at Cushing hub amid low stockpiles, while traders awaited Baker Hughes' rig count data for US supply insights. Brent crude hit $84.95 (+0.85%), and WTI reached $79.74 (+1%).
The surge highlights geopolitical risks to Middle Eastern oil exports and potential supply disruptions. Markets are pricing in fears of reduced flow through critical chokepoints, with the Strait of Hormuz already under scrutiny. The EIA's review of Cushing storage adds technical concerns about physical market imbalances. Traders are closely watching Baker Hughes' data to assess US production resilience amid higher prices.
For MENA investors, the situation underscores the region's vulnerability to geopolitical shocks. The Strait of Hormuz and Bab el-Mandeb are vital for Gulf oil exports, making regional stability crucial. Investors should monitor Iran-US diplomatic developments, OPEC+ policy shifts, and US shale production trends. The upcoming EIA and Baker Hughes reports will provide further clarity on supply-side dynamics.
