Global Tensions Threaten Oil Price Spike as Refinery Attacks Mount

A protracted stalemate over control of the Strait of Hormuz is raising the risk of oil prices spiking to $120 per barrel, according to an OilPrice.com report. The critical chokepoint remains mostly closed, with tanker traffic at two-month lows after five and a half months of war, negotiations, and mutual threats between the U.S. and Iran. Early on Wednesday, August 12, Brent crude prices rose above $89 per barrel amid conflicting claims from Tehran and Washington over who controls the strait.

Analysts warn the physical oil market could reach a "tipping point" by end-September or early-October if the stalemate persists. Global inventories are depleting despite strategic stockpile releases, and China has tentatively returned to increased crude imports after a low period in May and June. While crude futures have not yet hit record highs, refining margins in the Atlantic Basin have jumped to their highest on record due to supply bottlenecks and peak summer demand.

Geopolitical pressure is intensifying on a second front, as America's authoritarian adversaries—China, Russia, Iran, and North Korea (increasingly referred to as CRINK)—forge a flexible but operational power bloc. This cooperation is altering strategic balances, with the war in Ukraine serving as a major arena for military exchange. North Korea has supplied ballistic missiles and troops to Russia, while Iran's drone technology has been critical to Moscow's campaign, OilPrice.com reported.

The conflict in Ukraine directly impacted global refining capacity on Thursday, as Ukrainian forces struck Gazprom's 200,000-barrel-per-day Neftekhim Salavat refinery in Russia's Urals region. The attack caused a fire at the facility, which was also hit in mid-July. Another Russian refinery, the 120,000-bpd Orsknefteorgsintez plant, has completely halted operations following Ukrainian drone strikes, with repairs potentially taking six months due to sanctions.

These sustained attacks have significantly reduced Russian fuel supplies. Russian refinery runs averaged about 3.6 million bpd in July, more than 30% below seasonal levels. The outages have led to domestic gasoline shortages, prompted Russia to restrict exports of refined products, and even forced Moscow to import gasoline from India. Ukraine also targeted oil infrastructure connected to the key Novorossiysk export terminal this week, extending pressure on Russia's ability to move crude.

For Bakken operators, the convergence of a prolonged Hormuz closure and continued attrition of Russian refining capacity creates a volatile but potentially supportive price environment. The tightening global fuel market, driven by both geopolitical supply disruptions and seasonal demand, underscores the strategic importance of stable production from regions like the Williston Basin. However, the deepening alignment of adversarial nations also points to a more fragmented and unpredictable global energy landscape for the foreseeable future.