Oil Climbs as Drone Hits US LNG Tanker, Iran Sanctions Expanded
Oil prices edged higher on Thursday after US President Donald Trump vowed a “very strong” response to a drone attack on a US-owned LNG tanker in Egypt.
The price surge reflects concerns over fresh US sanctions on Iran and Tehran’s warnings over the Strait of Hormuz, renewing fears of potential supply disruptions in the Middle East.
A drone hit a US-owned gas storage tanker at Egypt’s Mediterranean port of Damietta, British maritime security firm Ambrey said on Wednesday, citing an initial assessment of the incident.
The strike raised fears that the war with Iran, which has seen strikes across the region, could expand further.
A statement from Egypt’s petroleum ministry confirmed a fire at the port but made no mention of a drone attack. Port services firm Inchcape said in a separate message that two gas tankers had caught fire at Damietta.
The drone hit floating storage tanker Energos Winter, causing a fire that then spread to another vessel, Gaslog Salem, three other sources familiar with the incident said.
International benchmark Brent crude futures for October traded at $88.89 per barrel, up 0.9% from the previous close of $88.09. US benchmark West Texas Intermediate (WTI) futures traded at $84.69 per barrel, up 0.4% from $84.46 in the previous session.
Market sentiment was supported by escalating geopolitical tensions after Trump warned Iran following a drone attack on a US-owned LNG tanker in Egypt.
Speaking after a press conference in the Oval Office on Wednesday, Trump said: “We’re going to be hitting them very hard because it’s our turn to hit them.”
Asked whether Iran was responsible for the attack, Trump said he had been briefed and that “it’s going to be straightened out.”
Meanwhile, the US Central Command (CENTCOM) said it had launched an “intense wave of strikes” against Iranian targets in response to attempted missile attacks on US assets in the Middle East.
Iran’s Islamic Revolutionary Guard Corps (IRGC), in turn, warned that the Strait of Hormuz would remain closed as long as US threats persisted, adding that its naval forces maintained full control over the strategic waterway.
The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced a new round of sanctions on Wednesday, July 29, targeting a network linked to the Islamic Republic and adding 10 companies and seven oil tankers to its sanctions list.
According to the U.S. Department of the Treasury, the sanctions were imposed under Executive Order 13902 and target entities and companies due to their connections with the Iranian regime.
Among the newly sanctioned entities are “Hormoz Safe Maritime Services” and “Persian Gulf Maritime Insurance Company,” both of which operate in Iran. The Treasury Department stated that these two entities are subject to secondary sanctions in addition to primary sanctions.
According to the statement, the sanctioned companies are registered in Hong Kong, China, and the Marshall Islands, while the seven designated oil tankers operate under various flags. The U.S. Treasury identified these tankers as being connected to the companies included in the new sanctions package.
Oil prices, however, found support after the US Federal Reserve left its benchmark interest rate unchanged at 3.50%-3.75%, reinforcing expectations that economic activity and fuel demand will remain resilient.
Additional support came after the US Energy Information Administration (EIA) reported that commercial crude oil inventories fell by 7.2 million barrels to 404.5 million barrels last week, compared with market expectations for a 700,000-barrel increase, signalling stronger-than-expected demand
Oil Prices Rise in Reaction to Saudi, U.S. Strikes Against Iran
