Oil Prices Surge on Strait of Hormuz Attack, Bakken Differential Holds

Global oil prices jumped more than 1.6% on Tuesday, with Brent crude topping $90 per barrel, following an attack on a tanker in the critical Strait of Hormuz. The incident has reignited fears of supply disruptions during peak summer demand.

According to live price data, West Texas Intermediate (WTI) crude settled at $83.85, a gain of $1.37. The international benchmark Brent crude rose to $90.69, up $1.47. The Bakken crude differential to WTI was -$3.42.

The price surge was triggered by a security incident in a key global oil chokepoint. OilPrice.com reported that a Kuwait-owned oil products tanker, the Kaifan, was struck by an unknown projectile in the Strait of Hormuz near Oman on Tuesday. The crew abandoned the vessel, according to the United Kingdom Maritime Trade Operations.

This attack is the latest in a series of escalating tensions that have severely disrupted tanker traffic. OilPrice.com noted that traffic through the Strait of Hormuz has ground to a halt amid multiple Iranian attacks, collapsing to a two-month low. Tanker operators have largely stopped attempting to transit the Strait.

The regional security situation deteriorated further on Monday after Yemen's Houthi group declared a naval blockade on Saudi Arabia, threatening an alternative export route. Rigzone summarized that these escalating Middle East tensions fueled supply concerns, driving prices higher.

For Bakken operators, the price increase directly improves cash flow and margins. With WTI above $83, the effective price for Bakken crude delivered to major hubs is approximately $80.43, given the current differential. This strengthens the economic incentive for production and drilling activity in the Williston Basin.

The sustained premium of Brent over WTI, now near $7, also supports the global competitiveness of U.S. crude exports, including barrels sourced from North Dakota. However, the ongoing geopolitical risks introduce volatility, as any de-escalation could quickly reverse today's gains.

The market remains sensitive to further disruptions along major shipping routes. With tanker traffic paralyzed in the Strait of Hormuz and new threats in the Red Sea, the risk premium in oil prices is likely to persist in the near term, providing a supportive price environment for domestic producers.