U.S. and Iran Hardline Standoff Lifts Oil Prices Again... Supply Disruptions Expected Until 2027

The United States and Iran continue to hold negotiations over the reopening of the Strait of Hormuz, but military tensions show no signs of easing. While some mediating countries have expressed optimism that an agreement is imminent, the United States has carried out attacks on ships heading toward Iran. In response, Iran has insisted it will not reopen the strait until its demands are met. With both sides taking a hardline stance, international oil prices are rising once again, and there are even predictions that disruptions in Middle Eastern oil supplies due to the Iran conflict will continue until the end of next year.

According to Bloomberg and other sources on August 11 local time, Khawaja Asif, Pakistan's Minister of Defence who has been mediating the negotiations between the United States and Iran, stated that the two sides are “close to some form of agreement” regarding the Strait of Hormuz issue. Minister Asif said, “The situation is once again moving in a direction favorable to a peace agreement or some sort of settlement,” adding, “Signals over the past two or three days suggest that the parties are on the verge of reaching some form of agreement.”

However, it remains unclear whether the negotiations between the two sides will lead to the full reopening of the Strait of Hormuz. Iran has made it clear that it intends to maintain its bargaining leverage with the United States by separating its discussions with Oman over vessel passage from the issue of lifting the blockade. Mohsen Rezaee, who was recently appointed as Secretary of the Supreme National Security Council (SNSC) of Iran, met with China's ambassador to Iran on the same day and said, “The Strait of Hormuz will never be opened until the United States changes its stance and accepts Iran's conditions.”

The United States is maintaining its maritime blockade against Iran. The U.S. Central Command announced that it had attacked a Panama-flagged cargo ship, the Belanova, which was attempting to head to an Iranian port in violation of the maritime blockade. A U.S. Navy MH-60 helicopter fired two Hellfire missiles and disabled the ship's steering system. So far, Central Command stated that it has guided 55 merchant vessels attempting to violate the blockade onto different routes, neutralized three ships that failed to cooperate, and conducted boarding inspections on two vessels.

Amid these escalating tensions, international oil prices have risen. On the ICE Futures Exchange, October Brent crude oil futures closed at USD 88.91 per barrel, up 1.36%. On the New York Mercantile Exchange, September U.S. West Texas Intermediate (WTI) crude futures settled at USD 83.20 per barrel, a 1.3% increase.

There are even projections that supply disruptions will persist into next year. The U.S. Energy Information Administration (EIA) said in a report released on this day that it has sharply lowered its outlook for Middle Eastern oil production over the next month due to prolonged tensions over the Strait of Hormuz. Last month, it had expected production and trade to be close to pre-war levels by the end of this year, but in the latest report, it pushed back the normalization period to early 2027. In particular, it projected that supply disruptions would continue at about 600,000 barrels per day until the end of 2027.

With supply disruptions expected to be prolonged, oil price forecasts have also been raised. The EIA now projects an average Brent crude price of approximately USD 85 per barrel for the third quarter of this year—USD 11 higher than last month's forecast of USD 74 per barrel.

This content was produced with the assistance of AI translation services.