Iranian ships keep moving through the Strait of Hormuz while commercial traffic stalls, pushing crude prices higher and lifting USO. The WSJ reports the disruption.
Fighting between the U.S. and Iran this week has disrupted shipping traffic through the Strait of Hormuz, with one exception: Iranian vessels keep moving. The Wall Street Journal reported that commercial shipping has largely stalled in the chokepoint, while Iran's own ships continue to transit unimpeded.
Crude oil prices jumped on the news, lifting the United States Oil Fund (USO) along with them. The strait carries about a fifth of the world's oil supply, and any disruption to its flow tends to feed a risk premium into crude futures. The WSJ report cited shipping data showing a sharp drop in tanker traffic through the strait since Monday, with insurance premiums for vessels in the region climbing.
Iran's military has not been targeting its own cargo ships, and the country's tankers appear to be operating under a separate set of risks. The WSJ noted that Iranian-flagged vessels are still making scheduled runs, even as foreign-flagged tankers divert or anchor outside the strait.
The rally in oil prices has been modest so far, with Brent crude up about 2% on the week. How long the disruption lasts will determine whether the price move extends. For now, the market is watching the next round of military exchanges, not diplomatic signals.
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