- Saudi-flagged crude oil tanker damaged near Hormuz after LNG tanker hit, sources say
- Saudi Arabia considers expansion of oil pipeline to Red Sea, sources say
- Societe Generale expects the oil market to move into surplus in late 2026
July 7 (Reuters) - Oil prices rose on Tuesday after reports of attacks on vessels near the Strait of Hormuz revived fears of disruptions to shipping through the critical energy transit route.
Brent crude futures gained 76 cents, or 1.1%, to $72.75 a barrel, while U.S. West Texas Intermediate crude rose 73 cents, also 1.1%, to $69.28 a barrel at 1256 GMT.
"The overriding theme this morning is a ship being shot at in the Strait of Hormuz," Saxo Bank analyst Ole Hansen said. "That's bringing some geopolitical risk premium back into the price. It's not a lot compared with what we've seen in the past, but it's the main driver behind the bid in the market."
"So if there's any further escalation, then $75 would be the natural level to look at next ahead of $80."
A Qatari LNG tanker and a Saudi-flagged crude oil tanker were damaged near the Strait of Hormuz, sources said on Tuesday, after reports that Iran's Revolutionary Guards fired missiles at ships in the waterway overnight.
Qatar's foreign ministry spokesperson said Tehran bore full legal responsibility for the attack and any resulting damage or consequences.
Talks to reach a final deal between Tehran and Washington will not take place if U.S. threats continue, Iran's foreign minister said on Tuesday, following U.S. President Donald Trump's threat to "finish the job" unless a deal is done.
Investors are monitoring talks between the U.S. and Iran and their implications for shipping through the Strait of Hormuz, which prior to the beginning of the Iran war carried a fifth of the world’s daily supply of oil and LNG.
Societe Generale said the oil market is expected to shift from a deficit into a surplus in late 2026 and through 2027 as supply growth outpaces slower demand growth.
The bank cut its oil price forecasts to $75 a barrel for the fourth quarter of 2026 from $83 previously and to an average of $73 a barrel in 2027 from $79, adding that inventories should gradually rebuild, although volatility is likely to remain high.
Saudi Arabia is considering expanding the capacity of its crude oil pipeline to the western Red Sea coast, five sources close to the matter said, which would enable the kingdom and possibly its neighbours to transport more oil without using the Strait of Hormuz..
Appetite for buying Saudi crude is limited since, even after the biggest price cut in more than two decades for Saudi Arabian crude oil sold to Asia, some rival Gulf supplies are still cheaper.
Also on Tuesday, Kyiv's military said Ukrainian drones struck eight tankers from Russia's "shadow fleet" of ageing vessels used to bypass sanctions that were delivering fuel to Crimea overnight.
Reporting by Anushree Mukherjee and Pranav Mathur in Bengaluru and Emily Chow in Singapore, additional reporting by Ahmad Ghaddar in London; Editing by Jacqueline Wong, Jamie Freed, Barbara Lewis and Joe Bavier
Source: Reuters