Oil Above $90 as Iran Strikes Tankers in Hormuz

Brent crude briefly climbed above $90 a barrel on Monday 20 July, reaching its highest level since 11 June as renewed fighting between the United States and Iran again restricted shipping through the Strait of Hormuz.

Iran’s Revolutionary Guard said two oil tankers had been immobilised following explosions while attempting to use what it described as an unsafe route through the waterway. The claim had not been independently verified, although the United Kingdom Maritime Trade Operations centre separately reported a vessel on fire northwest of Oman’s Kumzar.

Only four vessels crossed the strait on Sunday, down from eight the previous day, according to LSEG shipping data. Brent had already gained 15.9% during the preceding week, its largest weekly rise since April, while West Texas Intermediate moved above $83 a barrel.

For European importers, this is the third violent repricing of the year.

Brent approached $120 during the first phase of the conflict and later climbed above $125. It then fell sharply as June’s interim agreement began releasing trapped supply and raised hopes that commercial traffic would normalise. By 24 June, Brent had settled at $73.74 a barrel.

It has now risen by roughly a quarter from that level in less than a month.

Europe spent the first half of 2026 preparing for a temporary energy-price spike. What it received was a recurring geopolitical shock.

A truce that never reached the water

The interim agreement reached in June was genuine, and for a time markets believed it would work.

The Islamabad Memorandum committed the United States and Iran to a ceasefire, limited sanctions relief and negotiations towards a more comprehensive settlement. It also created a framework for restoring commercial passage through Hormuz and gradually easing the American blockade.

The immediate market response was dramatic. Tankers carrying stranded crude began leaving the Gulf, military escorts supported shipping movements and oil prices returned to levels last seen before the war.

On 24 June, around 20 million barrels of crude were reported to have exited Hormuz within 24 hours. But even then, American officials acknowledged that a return to normal navigation was being delayed by Iranian mines.

The agreement reduced the pressure. It did not remove the underlying causes of the conflict.

Hostilities subsequently resumed, and Washington declared the truce over after new attacks on commercial shipping. American forces have now conducted strikes on Iran for nine consecutive nights, while Iran has attacked targets in Kuwait and Bahrain and threatened vessels it says are violating its navigation rules.

The anticipated recovery in shipping has effectively stalled.

That distinction matters. A diplomatic agreement can be announced in a day. Mines, damaged ports, military deployments, insurance exclusions and mistrust cannot be removed at the same speed.

The June settlement changed market expectations. It did not change the physical condition of the strait.

Why $90 understates the problem

The headline oil price still understates the scale of the risk facing Europe.

The market is not currently pricing a complete and prolonged closure of Hormuz. If it were, Brent would almost certainly be considerably higher.

Instead, it is pricing repeated interruptions: vessels being attacked or detained, shipping volumes falling into single digits, military escorts being required, insurers raising premiums and companies delaying cargoes until the security picture improves.

All of that costs money, and it gets added to every cargo leaving the Gulf.

The brief controversy over an American transit fee illustrated how quickly free passage through Hormuz can become politically negotiable. President Donald Trump proposed charging 20% on cargo passing through the waterway on 13 July, before withdrawing the plan the following day in favour of proposed investment agreements with Gulf governments.

The fee did not survive, but the episode revealed a larger shift. Access to the world’s most important energy waterway can no longer be treated as an automatic commercial right insulated from the conflict around it.

The second problem is physical supply.

Before the war, approximately 20 million barrels of crude and oil products passed through Hormuz each day. In March, those flows fell to a trickle, forcing Gulf producers to cut output by at least 10 million barrels a day.

The International Energy Agency described it as the largest supply disruption in the history of the global oil market. It estimated that global oil supply fell by 10.1 million barrels a day during March alone.

Those losses cannot be reversed simply because a ceasefire is announced.

Storage was filled, wells were shut, refining capacity was taken offline and energy infrastructure was damaged across the region. IEA Executive Director Fatih Birol has estimated that restoring Middle Eastern output to pre-war levels could take approximately two years overall, with the timetable varying significantly between countries.

Inventories depleted during months of disruption will also have to be rebuilt.

With stocks that low, prices move on any bad news at all — an attack, a warning, or another fall in tanker numbers.

What it costs Europe

The impact is particularly uncomfortable for Europe because the continent imports much of the energy it consumes.

Higher crude prices transfer income towards producers while raising costs for European manufacturers, transport companies, airlines and consumers. The effects spread beyond petrol and diesel.

Freight rates increase. Marine-insurance premiums rise. Petrochemical feedstocks become more expensive. Companies holding limited inventories have to compete for replacement supplies, while those negotiating annual energy contracts must price in volatility that may not disappear when the current fighting pauses.

The United States is not immune. American consumers and industrial companies also suffer when fuel prices rise.

But the country has a substantial domestic upstream industry whose producers can benefit from elevated crude prices. Europe experiences the shock more directly as an import cost, with fewer domestic gains to offset it.

That worsens an economic problem Europe was already struggling to solve: weak industrial growth combined with energy prices that remain structurally higher than those faced by many American and Asian competitors.

It also complicates monetary policy.

At $90, Brent remains below the extreme levels reached earlier this year. But central banks and businesses do not respond only to the absolute number. They respond to the speed of the increase, the probability of another rise and the persistence of the shock.

A company signing a twelve-month supply contract cannot assume that oil will fall simply because another diplomatic initiative is announced. A central bank cannot ignore a rise in fuel and transport costs merely because the latest inflation shock may eventually reverse.

Volatility itself becomes an economic cost.

Europe keeps pricing a return to normal

The temptation is to treat the latest move as another temporary spike.

That is what markets did after the first major escalation. It is what they did again after the June agreement. Each time, the working assumption was that diplomacy would restore commercial passage and allow energy prices to return to normal.

That assumption has now failed twice.

The more realistic conclusion is not that Hormuz will remain permanently closed. It is that reliable access to it has become conditional.

Shipping flows will depend on military decisions, negotiations, insurance cover and the willingness of vessel owners to expose crews and cargoes to danger. Even when the strait is technically open, it may not function normally.

For European businesses, the distinction between closure and severe restriction is less important than it appears. Both produce higher costs, delayed shipments and uncertainty that must be priced into contracts and investment decisions.

The verdict

Brent above $90 is not yet a repeat of April’s price shock. But it is evidence that the June agreement did not fix the underlying problem.

Europe should stop planning around a simple cycle in which fighting produces a spike, diplomacy produces a ceasefire and prices return to their previous range.

Hormuz has become a variable rather than a given.

That means European companies should plan for a higher and more volatile energy-cost base for as long as the conflict remains unresolved. Not because the strait will necessarily remain closed, but because its dependable operation can no longer be assumed.

Ceasefires can be agreed in a morning. Tanker routes, insurance markets, damaged infrastructure and depleted inventories take considerably longer to repair.

The latest one did not survive a month.