Tensions have escalated once again in the Strait of Hormuz. A vessel loaded with Qatari liquefied natural gas caught fire after being attacked while exiting this critical global energy chokepoint, intensifying market concerns that supply disruptions could last longer than anticipated. This has pushed both Brent crude oil and European natural gas prices higher.
According to reports, the LNG carrier Al Rekayyat, operated by Qatar's national shipping company Nakilat, was struck early Tuesday morning approximately eight nautical miles east of Lima, Oman. The security firm EOS Risk Group issued an alert suggesting the attack was likely carried out by an Iranian suicide drone or missile. The incident caused a fire onboard but resulted in no casualties. This marks the first attack on a Qatari LNG carrier since the US-Iran conflict flared up in late February.
In a related development, Iran's Islamic Revolutionary Guard Corps reportedly fired at least two missiles at several commercial ships passing through the Strait of Hormuz. Two merchant vessels were hit and suffered significant damage, though no injuries were reported.
Driven by these developments, Brent crude oil prices climbed over 1% at one point to $72.76 per barrel, nearing the $73 mark. European natural gas prices surged as much as 6% in a single day, marking their largest gain in a month. Conversely, gold prices fell for a second consecutive day, dropping as much as 1.2% to below $4,120 per ounce, as market repricing of inflation pressures is creating a divergence in safe-haven demand dynamics.
Unusual Route Raises Concerns
The Al Rekayyat had previously been fully loaded at Qatar's Ras Laffan export terminal.
Shipping data indicates that the vessel turned off its transponder while navigating near the Strait of Hormuz, suggesting it was not using an Iran-approved shipping lane.
Following the attack, another Qatari LNG carrier, the Al Areesh, abruptly turned around and began circling before entering the strait. Meanwhile, other tankers—including crude oil and liquefied petroleum gas carriers—continued to transit the contested waterway, using both Iran-approved and US-managed routes.
An analyst from Kpler noted that the continued use of different routes by various vessels indicates the strait remains open for traffic. However, overall passage has become more fragmented as shipowners adopt different routing strategies based on their individual risk assessments.
Return to Normalcy May Be Slower Than Expected
An analyst from UBS pointed out that the energy sector led market gains on Tuesday. The attack on the LNG carrier has reignited fears of prolonged supply disruptions, while progress toward normalizing traffic through the Strait of Hormuz appears to have stalled slightly, remaining well below pre-conflict levels.
Another UBS analyst suggested that oil prices might remain under pressure in the short term as crude from tankers previously stranded in the strait gradually enters the market. However, the Chief Investment Officer of UBS Global Wealth Management believes current oil price levels overestimate the speed at which traffic through the waterway will normalize. A full restoration of shipping confidence, the return of tankers to the Persian Gulf to load export crude, and the restart of idled oil wells are all processes that will take time and may proceed slower than expected.
On a broader economic front, France has revised its 2026 GDP growth forecast downward from 0.9% to 0.7%, citing the Middle East conflict as a hindrance to output growth.
US-Iran Talks Face New Complications
The timing of this attack is particularly sensitive. US-Iran talks are currently paused during the funeral proceedings in Tehran for the late Supreme Leader Ali Khamenei, with Qatari officials indicating discussions will resume after the ceremonies conclude.
Iran's Foreign Minister warned on Tuesday that negotiations for a final agreement will not commence if threats persist, referring to a memorandum of understanding with the United States. Meanwhile, Iran's President is scheduled to travel to Iraq to participate in funeral processions planned for Wednesday in Najaf and Karbala.
Concurrently, the US President is set to attend a NATO summit in Ankara later Tuesday, where the Iran conflict is expected to be a central topic among leaders. Analysts note that this attack is testing an agreement reached by the US and Iran in late June aimed at preventing assaults in the Strait of Hormuz.
Market Landscape Undergoes Subtle Shifts
At the trade level, the ongoing instability in the Strait of Hormuz is prompting some market participants to adjust their strategies. Two supertankers carrying Saudi crude oil are heading to the United States for the first time since February, following the strait's reopening.
Indian state-owned refiners are reportedly in talks with traders selling Iranian crude and are prepared to make purchases if the US extends waivers beyond August or eases related restrictions.
Regarding Russia, the average price of Urals crude at Western ports in early July has fallen to $41.66 per barrel, returning to levels seen before the Iran conflict and less than half its price during the peak of oil market turbulence in April.
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