Edward Byrd
Crude oil prices jumped on Tuesday, with the United States Oil Fund (USO) climbing 6.73% to 125.92 dollars, as hormuz tanker traffic sank to its lowest level in more than two months amid a sharp deterioration in Gulf shipping security.
| Price | 125.92 USD |
|---|---|
| Day change | +7.94 (+6.73%) |
| 52-week range | 102.42 – 143.78 |
| RSI (14) | 53.55 |
| Volume | 5,179,491 |
Why Hormuz Tanker Traffic Has Stalled
Vessel movement through the Strait of Hormuz had briefly picked up between mid June and early July, when a since collapsed memorandum of understanding between the United States and Iran opened a narrow window of calm. That window has closed. Ship tracking data reviewed by market watchers shows traffic plunged to a two month low by the end of July and has stayed depressed ever since, even as Washington tried to talk oil prices down and floated the idea of resuming talks with Tehran.
Iran has pushed to assert more direct control over vessels moving through the strait, while Houthi forces aligned with Tehran have renewed threats against Saudi linked shipments in the Red Sea and the Bab el Mandeb Strait, the narrow passage feeding into the Arabian Sea. Analysts tracking the region describe the current environment as the most dangerous for crude shipments since the broader Iran conflict began.
A Tanker Turns Back
The strain showed up directly over the weekend when the Egypt Prosperity, a very large crude carrier, aborted its exit from the Persian Gulf after receiving direct radio threats. Crew members reported hearing explosions near the ship. Incidents like this are pushing more tanker owners toward using dark mode, meaning they switch off tracking transponders, to slip through the chokepoint unnoticed, while others are turning back or refusing to attempt the transit altogether.
What This Means for Oil Supply and Prices
The Strait of Hormuz carries a large share of the world's seaborne crude, so any hesitation among tanker operators tightens the effective flow of oil even if production itself hasn't changed. That risk premium is showing up in USO, which trades within a 52 week range of 102.42 to 143.78 dollars and currently sits with a relative strength index of 53.55, a reading that suggests the fund is neither overbought nor oversold despite the day's sharp gain.
Matthew Wright, an analyst at ship tracking firm Kpler, described the current stretch as the worst period for crude trade security since the crisis began. With Iran signaling little willingness to ease pressure on shipping lanes and Houthi threats extending into the Red Sea corridor, the market is pricing in the chance that disruptions persist rather than fade.
Can Diplomacy Reopen the Chokepoint
Washington's announcement that talks with Iran could resume offers a possible path toward easing tensions, but the prior memorandum of understanding already collapsed once, and traffic never fully recovered even during that truce. Until security consultancies report a meaningful drop in threats against vessels, tanker owners appear likely to keep avoiding the strait or transiting it under the radar.
James Stephens
