Holly Herrera
Crude oil prices barely budged even after another tanker hit rattled the Strait of Hormuz this week, with the United States Oil Fund (USO) trading at 127.4 dollars, up just 0.04% on the day. That muted reaction, against a backdrop of fresh attacks in one of the world's busiest chokepoints, says a lot about how traders are reading the risk right now.
| Price | 127.4 USD |
|---|---|
| Day change | +0.05 (+0.04%) |
| 52-week range | 102.42 – 142.33 |
| RSI (14) | 50.94 |
The UK Maritime Trade Operations confirmed the latest strike took place Tuesday in the waters between Iran and Oman, following an attack a day earlier off the Omani coast. Windward identified the targeted ship as an Aframax tanker flying a Liberian flag, carrying 704,000 barrels of jet fuel. Despite being hit, the vessel reached port safely in Fujairah.
Why Another Tanker Hit Isn't Moving the Oil Market Much
Traffic through the strait has collapsed well below normal levels, yet oil prices are holding steady rather than spiking. Ship tracking data from Kpler showed only five commodity vessels passed through the waterway on Tuesday, matching Monday's count but far under the ten day average of fifteen. Compared to volumes seen before the wider regional conflict began, current traffic is a small fraction of what it once was. Windward's numbers from Wednesday showed eleven inbound and six outbound crossings, with six of those vessels being tankers, three heading each direction, all broadcasting their transponder signals.
The relatively calm price action suggests traders are betting that diplomacy, however slow, will eventually prevail. Iran and Oman are reportedly negotiating a temporary shipping corridor that could allow for a partial, interim reopening of safer passage through the strait. Pakistan and other regional players have also pushed to bring Iran and the United States back to the table, though those efforts have yet to produce a breakthrough.
China's Outsized Stake in the Strait
China remains the dominant buyer of crude moving through Hormuz, receiving roughly 65% of all oil exports that pass through the chokepoint, according to Windward's data. That concentration means any disruption there carries consequences well beyond regional politics, tying Beijing's energy security directly to the outcome of Iran and Oman's corridor talks. It also helps explain why global oil benchmarks have not reacted more sharply: much of the exposed volume is contracted and destined for a single, price sensitive buyer that has strong incentive to see stability restored.
What the Muted Price Reaction Signals
USO's 52 week range spans 102.42 to 142.33, and at 127.4 the fund sits comfortably in the upper half of that band, not near panic territory. Its relative strength index reading of 50.94 points to a market in neutral territory, neither overbought nor oversold. That balance reflects a market that has grown somewhat numb to repeated tanker incidents, pricing in continued disruption without assuming a full closure of the strait.
Whether that composure holds may depend on how quickly Iran and Oman can formalize their proposed shipping corridor, and whether further strikes start hitting vessels carrying crude rather than refined products like jet fuel. For now, traders seem willing to look past the headlines and wait for tangible progress at the negotiating table.
James Stephens
Jake Fox