Oil prices slip in seesaw trade as US-Iran tensions over Hormuz persist

Oil prices slipped in choppy trading on Wednesday as the United States and Iran remained locked in a standoff over control of the Strait of Hormuz, a critical chokepoint for global crude shipments. The seesaw session reflected deep uncertainty among traders, who are weighing supply disruption risks against hopes of a diplomatic breakthrough.

Brent crude, the international benchmark, had earlier extended a six-day winning streak as market focus shifted to the narrow waterway and widening supply deficits. But those gains evaporated as the latest headlines from the region pointed to no immediate resolution, pulling prices lower by the close.

Traffic through Hormuz plunges

The scale of the disruption has become stark. Only six ships crossed the Strait of Hormuz in a recent period, a dramatic collapse from the 140 vessels that used the route in pre-war days. The figure, reported by regional monitors, underscores how far maritime traffic has fallen as tanker operators avoid the risk of attacks or seizure.

Iran has long threatened to close the strait in response to economic pressure, and the United States has repeatedly vowed to keep the waterway open. With both sides digging in, the shipping industry is bracing for a prolonged period of heightened danger.

Ship attacks stoke supply fears

Crude futures had climbed earlier in the session after separate reports of ship attacks in West Asia revived concerns about the safety of key shipping lanes. These incidents, though not yet fully confirmed, added to a growing list of disruptions that have already taken a toll on regional exports.

Analysts say the market is now pricing in a higher risk premium, but the direction of prices remains hostage to headlines. Any sign of de-escalation could trigger a sharp selloff, while another attack could send prices soaring.

Deficits and demand cloud the outlook

Beyond the geopolitical drama, the oil market is also grappling with underlying fundamentals. Brent has held onto gains driven by expectations of supply deficits in the coming months, as production cuts by major exporters tighten global inventories.

Demand signals remain mixed, with some economies showing resilience while others slow. The combination of a tense Hormuz situation and a tightening balance sheet has left traders cautious, with many opting to stay on the sidelines until clearer direction emerges.

What to watch next

All eyes are on the Strait of Hormuz and any new diplomatic overtures between Washington and Tehran. A single statement from either side could shift prices sharply, so traders will be monitoring news wires closely in the coming sessions. The trajectory of ship crossings will also serve as a key barometer of how much longer the standoff can last.