Oil’s Calm Is Over as Middle East Risks Return

Renewed military exchanges between the United States and Iran have reignited the Middle East risk premium in oil markets, driving ICE Brent above US$76 per barrel this week after a gain of around US$4 per barrel. The escalation has slowed vessel movements through the Strait of Hormuz to near-standstill, as concerns over sustained supply disruption overshadowed fresh overtures from Washington towards talks with Tehran.

Shipping activity in the Gulf has borne the brunt of the tensions. Renewed attacks on transiting vessels prompted operators to suspend departures, with QatarEnergy reportedly turning back three LNG carriers, the Al Ghariya, Duhail and al Ruwais, from the waterway. Marine insurance costs have climbed again in response. QatarEnergy has also paused plans to quickly restart output at its Ras Laffan liquefaction plants following an attack on the Al Rekayyat LNG carrier, despite gathering some 11 empty vessels near the port.

Iran, meanwhile, is racing to move barrels while it can, loading 11 million barrels on a single day after President Trump threatened to reinstate a blockade on Iranian exports via the Gulf of Oman. The International Energy Agency has extended its supply-surplus outlook, trimming its 2026 demand forecast while projecting world supply to fall by 3.7 million barrels per day amid the disruptions. India has responded to its exposure by pressing ahead with a 13-million-barrel strategic reserve at Mangalore, built by ONGC.

Elsewhere, a one-month Russian diesel export ban has pushed European diesel cracks to a 15-year high, while Freeport LNG has begun an unplanned turnaround in Texas that threatens to tighten Atlantic Basin supply into late August.

For Malaysian and Southeast Asian maritime and oil and gas operators, the developments carry direct implications. Hormuz remains a critical artery for crude and LNG cargoes serving Asian buyers, and prolonged disruption will raise freight and insurance costs, complicate LNG scheduling and tighten regional product availability. Higher Brent benchmarks may support upstream sentiment and Malaysian export revenues, but volatility complicates chartering, bunkering and procurement decisions. India's stockpiling drive and China's move to reopen product export floodgates signal shifting regional trade flows that Southeast Asian shipping and services players will need to monitor closely.