Marine insurance companies advise ship owners to suspend sailing through the Strait of Hormuz

Oil holds gains as supply risks assessed and tensions renew

Renewed conflict raises new doubts about the recent recovery in Gulf oil exports

Oil prices held their gains on Thursday, albeit at a slower pace than the sharp gains recorded in the previous session, as investors continued to assess the risks of supply disruptions following renewed regional tensions and the impact of new US strikes on Iran, along with threats to shipping traffic through the Strait of Hormuz.

Market traders see that chances of de-escalation still exist despite the recent escalation, which limits price surges to higher levels at the moment.

Brent crude futures fell by $1.03, or 1.32 percent, to $76.99 a barrel by 07:49 GMT. U.S. West Texas Intermediate crude also fell by 88 cents, or 1.2 percent, to $72.64 a barrel.

The two benchmark crude oils hit their highest levels since June 22 on Wednesday, after rising more than 8 percent, following US President Donald Trump's announcement of the effective end of the ceasefire with Iran and his order for new strikes on Iranian targets, with warnings of further military operations, which prompted Tehran to threaten navigation in the Strait of Hormuz.

The US military launched new strikes on Iran, followed by Iranian attacks on Kuwait and Bahrain, in the latest episodes of escalation hindering efforts to end the war. Washington said the strikes were in response to an attack that targeted three cargo ships in the Strait of Hormuz on Tuesday.

Tim Waterer, chief market analyst at KCM Trade, said: 'Traders are reassessing the situation, especially given the uncertainty about the future of oil flows through the Strait of Hormuz, while awaiting a reduction in tensions after the recent escalation and mutual attacks, which keeps oil prices at relatively high levels without a further surge.'

Trump indicated that Iran had been in contact 'for some time' and expressed a desire to reach an agreement, while insurance sector sources reported that some war insurance companies advised shipping companies to suspend their voyages through the strait, while other companies began reviewing their insurance policy terms.

Before the recent escalation, oil prices were declining as the market tried to absorb the surplus supply coming from the Middle East after the truce, in addition to signs of rising inventories.

About one-fifth of global oil and liquefied natural gas supplies pass through the Strait of Hormuz, making any disruption in the waterway have a direct impact on international markets.

Goldman Sachs said the risks to Gulf oil flows and prices in the near term remain high, expecting flows to return to normal by the end of July if negotiations continue, Iranian oil waivers are reinstated, and shipping companies receive security guarantees.

The bank explained that this scenario would require an increase in oil flows through the Strait of Hormuz by about 6.6 million barrels per day, while warning that the failure of talks or an escalation of attacks on oil tankers could lead to additional supply disruptions.

Anika Gupta, director of macroeconomic research at WisdomTree, said: 'In the base scenario, Brent crude is likely to move between $75 and $85 a barrel over the next month, with a slight upward bias.'

She added: 'The recovery of underlying supply is real but incomplete, and the narrative of supply surplus has lost much of its credibility at the moment, while diplomatic efforts have not collapsed despite being temporarily halted.'

Despite no major disruption recorded so far in Gulf crude oil exports, traders continue to closely monitor developments after several commercial vessels were attacked near the Strait of Hormuz in recent days, prompting some tanker operators to delay their voyages or change routes.

The US-led Combined Maritime Information Center continues to classify the threat to commercial shipping as 'grave,' indicating the potential disruption of one of the world's most important oil transit routes if the confrontation escalates.

The renewed conflict has also raised doubts about the recovery in Gulf oil exports after the ceasefire last month, as traders fear that repeated attacks on commercial vessels could slow the recovery of tanker traffic and threaten crude flows from the Arabian Gulf once again.

ANZ bank analysts warned that the recent escalation has repriced geopolitical risks in the oil market, noting that any collapse of the temporary understanding between the US and Iran could hamper the recovery of Gulf oil exports.

The bank added that oil tanker traffic had shown significant improvement before this week's attacks, but renewed security threats threaten to slow that improvement and bring back pressures on global energy markets.