Brent oil prices experienced an initial spike following reports of an Iranian attack on a cargo ship near Oman and the subsequent pause in U.N. escort operations in the Strait of Hormuz, according to the Danske Research Team [1]. This incident raised doubts over a preliminary U.S.-Iran agreement to end the war and prompted warnings from Iran's Persian Gulf Strait Authority that ships outside designated routes travel at their own risk [1].
Despite these renewed geopolitical tensions, crude flows through the Strait of Hormuz have risen to their highest level since the war began, as indicated by shipping data [1]. As a result, Brent prices have slipped below USD74 per barrel and are on track for steep weekly losses, with market participants shifting their focus from geopolitical risks to broader supply dynamics [1].
In the commodities sector, Iraq is reportedly considering leaving OPEC if it does not secure a higher production quota, following the UAE's exit from the organization on May 1, which has strengthened Iraq's bargaining position [1]. Danske Bank notes that if traffic through the Strait of Hormuz normalizes, increased output from the UAE and possibly Iraq could trigger a positive oil supply shock and potentially a price war, which could effectively end OPEC. However, Bloomberg tracking shows that Hormuz traffic remains well below pre-war levels despite the recent pickup [1].
CONCLUSION
Brent oil prices have declined below $74 per barrel as markets prioritize supply outlook over renewed geopolitical risks in the Strait of Hormuz. Potential shifts in OPEC membership and increased output from key producers could further impact oil prices if shipping traffic continues to recover. The market remains cautious, with supply dynamics currently outweighing geopolitical concerns.