Oil Prices Rise After Reported Iranian Attack in Strait of Hormuz

Oil prices rose on Tuesday morning following a report of an Iranian attack on commercial ships in the strategically vital Strait of Hormuz.

The reported attacks in the waterway, which typically handles around 20% of the world's oil traffic, reaffirm the fragility of the U.S. and Iran's interim peace agreement, as they negotiate a permanent end to their war.

International benchmark Brent crude futures with September delivery were last seen trading 50 cents higher at $72.49 per barrel, paring earlier gains.

U.S. West Texas Intermediate futures with August delivery advanced 39 cents to $68.94, after closing at its lowest level since Feb. 27 in the previous session.

Iran fired at least two missiles at ships navigating the Strait of Hormuz on Monday evening, Axios reported, citing two unnamed U.S. officials. The vessels suffered significant damage in the attack but no casualties, Axios said, according to one U.S. official.

The United Kingdom Maritime Trade Operations Centre, a British maritime security alert service, meanwhile, said Monday that it had received a report of an incident 8 nautical miles east of Limah, Oman.

The UKMTO said a tanker had been struck by an unknown projectile while travelling southbound, resulting in a fire. No casualties were reported in the incident.

Washington and Tehran signed a memorandum of understanding last month to bring their nearly four-month war to an end.

Indirect talks concluded last week without any sign of meaningful progress toward a lasting peace agreement.

President Donald Trump said Monday that the two countries would either make a deal or the U.S. would "finish the job," renewing threats of military action against the Islamic Republic.

"The situation around the Strait of Hormuz remains unsettled. But as we have argued since March, both sides should ultimately have an interest in containing the conflict," Holger Schmieding, chief economist at Berenberg, said in a research note published Friday.

"Ahead of the mid-term elections to Congress on 3 November, US President Donald Trump wants low oil prices whereas the Revolutionary Guards in Tehran covet the money from potential sanctions relief."