Brent Tops $91 After Unidentified Projectile Hits Vessel Transiting Hormuz

Projectile Strike Raises Tensions in Strait of Hormuz

A cargo vessel was struck by an unknown projectile while conducting an outbound transit of the Strait of Hormuz early Tuesday local time, according to the United Kingdom Maritime Trade Operations (UKMTO), a Royal Navy-sponsored organization. The impact damaged the vessel's engine room and resulted in a crew casualty, with the remaining crew being assisted by the Omani Coast Guard. No environmental impact has been reported at present.

The incident occurred close to Omani shores in what is believed to be the southern outbound corridor from the Persian Gulf into the Gulf of Oman, amid heightened security concerns as the United States and Iran remain distant on control over the region's most critical shipping lane for oil and LNG. Declarations by both countries earlier this week made the prospect of peace in the Middle East seem even more distant.

Oil Prices Jump

In early Tuesday Asian trade, Brent crude topped $91 a barrel, trading 0.69% higher at $91.50, while WTI crude rose 0.92% to $85.28 after surpassing $85. ING commodities strategists Warren Patterson and Ewa Manthey noted that prices remained supported by renewed fighting in Lebanon and attacks on vessels in the Strait of Hormuz, raising concerns over regional supply disruptions and complicating prospects for a US-Iran deal.

The 'Dark' Transit Tactic

The strike comes as oil producers have developed a new strategy to keep crude flowing despite the threat of Iranian drone attacks. The Greek-owned supertanker Kiku, a Very Large Crude Carrier stretching over 1,000 feet, docked at Qatar's Mesaieed oil export terminal on July 25. Four days later, loaded with crude, it passed through the Strait of Hormuz, maintaining a steady pace of about 13 knots.

On July 31, shortly after 2 pm off the coast of Dubai, the Kiku switched off its AIS transponder—a marine radio device that broadcasts a ship's identity, speed, course, and position—and vanished from tracking services. At 10 am on August 1, its signal reappeared on the other side of the strait.

The Kiku was part of a growing trend of "dark," US-military-escorted nighttime transits across the strait, designed to avoid Iranian drone attacks like the one that struck the Kiku a month earlier but failed to explode. According to reports, Saudi, Kuwaiti, Qatari, and Emirati oil companies, aided by the US Navy, have chartered tankers that disable their transponders, shuttle crude through Hormuz to the Gulf of Oman, and offload via ship-to-ship transfer to customer-owned tankers before returning. This shifts the burden of insurance risk and physical danger from commercial shippers to the US government and oil producers.

Keeping Oil Flowing

The US Department of Energy says oil traffic through the Strait of Hormuz has averaged between 8 million and 9 million barrels per day—roughly double what transponder-based trackers like Kpler suggest, as much of the traffic goes dark. CNN observed more than a dozen ship-to-ship transfers in the Gulf of Oman over two days, with tankers moving on to destinations including China, Taiwan, South Korea, the Philippines, Vietnam, and Thailand.

The war has disrupted about a fifth of the world's oil supply for six months, yet prices have not spiked as dramatically as some feared, thanks to market flexibility and producer adaptations. Saudi Arabia has rerouted about 5 million barrels per day through its East-West pipeline to the Red Sea port of Yanbu, while another 2 million barrels per day have been rerouted around the strait. Brazil, Guyana, and Venezuela have together added more than 1 million barrels per day of extra production, and the US has added hundreds of thousands of barrels more.

The US has released 400 million barrels from the Strategic Petroleum Reserve, and China has drawn heavily on its stockpiles while cutting crude imports. Global oil demand has shrunk with higher prices, and inventories have been depleted by as much as 1.9 billion barrels during the war—US emergency reserves are at their smallest since the early 1980s.

Refining and Fuel Pressures

Beyond crude, the conflict has strained refined products. Middle East refineries have been damaged, slowing fuel exports; Russian refineries have been targeted by Ukrainian drones, leading Moscow to cut fuel exports amid a domestic shortage; and China is limiting its refined fuel exports to avoid domestic shortages. US Gulf Coast refineries are shouldering a heavy burden of global fuel demand, and diesel and jet fuel prices have soared well beyond what crude prices would suggest due to high demand and limited capacity.

The Strait of Hormuz, at its narrowest, is about 23 miles wide, and two ships belonging to the UAE were attacked this week, underscoring the continued threat. Satellite imagery from August 14 shows rows of vessel dots arcing around the coast of Oman that do not align with AIS data, and according to Kpler, about 80% of strait traffic over the past two weeks has been "dark," routing around Oman. GPS jamming has also affected some tracking data.

On August 7, satellite images showed the Greek-owned shuttle tanker Nissos Kythnos lined up next to the Front Otra in the Gulf of Oman for a ship-to-ship transfer; by August 14, the Front Otra was detected in the Arabian Sea bound for Taiwan, while the Nissos Kythnos had returned to the Persian Gulf. Similarly, the Kiku anchored near Fujairah alongside the Greek supertanker Nave Electron for a transfer lasting about a week; the two separated on August 8, with the Nave Electron exiting loaded with oil for Ningbo, China. Around August 14, the Kiku went dark again off Fujairah, and by the next day its signal reemerged in the Persian Gulf heading back toward Qatar.

Political Context

President Donald Trump has shifted from jawboning oil prices lower with promises of negotiation breakthroughs to a prolonged naval blockade of Iran's ports, described as a "crushing economic operation." Oil prices have been creeping higher for weeks, edging closer to $100 a barrel. As one analyst noted, the market keeps finding a way, but it can't last this way forever—a permanent fix likely depends on a negotiated end to the war and the strait's control.