Traffic in Hormuz Reduced to Single Digits

The number of tankers passing through the Strait of Hormuz remained in single digits throughout the week. The slowdown in transportation in the region increased concerns about oil supply and caused the geopolitical risk premium in the market to rise.

October futures contracts of Brent oil, the reference indicator of the global oil market, completed the last trading day of the week with a 0.2 percent increase at $94.39.

October futures contracts of US West Texas Intermediate (WTI) crude oil decreased by 0.2 percent to $86.64. Thus, while Brent oil gained more than 12 percent in value in the last two weeks, the increase in WTI exceeded 10 percent.

US President Donald Trump's statements about increasing economic pressure on Iran were also among the developments that supported oil prices.

While the Trump administration is warning about comprehensive sanctions and economic consequences against countries that trade with Iran, China, one of the important buyers of Iranian oil, is also the target of Washington's pressure. OilPrice considers this process as part of the "economic war" campaign launched by the USA against Tehran.

The most important agenda item of the new week in oil markets will be the new sanctions package prepared by the USA against Iran.

US Treasury Secretary Scott Bessent announced that Washington is preparing to impose the "toughest sanctions in history" against Tehran. Details of the package are expected to be announced on Monday.

"This will be the largest coordinated economic isolation in the history of the world. This will be a one-two punch; we have a blockade and we will impose the harshest sanctions in history," Bessent said.

The low traffic in the Strait of Hormuz and the increase in geopolitical risks strengthen the expectations that oil prices may move towards the 100 dollar level.

Iraq is also working on alternative export routes to reduce dependence on the Strait of Hormuz.

The Iraqi government has approved three-month contracts for the marketing of oil through different export points. This step aims to reduce dependence on the Strait of Hormuz and protect oil revenues.

Iraq also aims to increase oil production to 8-10 million barrels per day in the next 6 years. However, in order to achieve this goal, OPEC quota and export routes must be suitable.