Oil prices pulled back on July 24 from the previous day’s highs above $100/bbl but remained on course for a strong weekly gain, as escalating attacks on tankers in the Red Sea and rising tensions in the Middle East continued to fuel concerns over global supply security.

Brent oil futures prices fell over 4% to around $96/bbl, while West Texas Intermediate (WTI) crude prices fell to around $88/bbl. The retreat was driven by profit-taking following the recent rally, along with renewed pressure on the macroeconomic outlook after US President Trump’s reinstatement of trade tariffs. Meanwhile, sentiment may also be influenced by a Reuters report that Pakistan is ​exploring a path towards a resumption of stalled US-Iran talks.

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Despite the late-session pullback, both benchmarks recorded strong weekly gains, with Brent crude rising over 10% and WTI crude rising about 8%, primarily driven by rising geopolitical risk premiums.

Geopolitical risks, oil supply disruptions 

This week’s rally was primarily driven by renewed attacks on Red Sea merchant ships, including those targeting tankers linked to Saudi Arabia. These attacks, believed to be carried out by the Iranian-backed Houthi rebels, mark a significant escalation of the threats to maritime oil transport.

Adding to the escalation, Pres. Trump warned that the US would hold Iran responsible for any future Houthi attacks on commercial shipping, threatening Tehran with "major military punishment" and saying he was considering "a massive attack" against the country. The comments, which followed the Houthi strikes on the two Saudi tankers, raise the stakes around any direct US-Iran confrontation and add a further layer of risk premium beyond the shipping attacks themselves.

Supply-side pressures have spread beyond the Middle East. Kazakhstan's reduced crude oil production due to infrastructure disruptions, coupled with ongoing hostilities between Russia and Ukraine impacting regional energy logistics and exports, has exacerbated an already tense global supply situation.

Kazakhstan's Energy Ministry said on July 23 that oil companies had reduced production due to export restrictions, and that pipeline loading operations by the Caspian Pipeline Consortium (CPC) had been suspended for safety reasons.

"Due to restrictions ​on crude oil intake into the pipeline system and in order to prevent storage tank congestion at oil-producing companies, a controlled adjustment of daily production levels was implemented resulting in a temporary reduction in oil output," it said in emailed comments.

The rise in oil prices is further pressuring broader financial markets, pushing up bond yields and exacerbating inflation concerns. Rising crude oil costs have also pushed up refined product prices, with diesel and other fuels seeing price increases exceeding those of crude oil.

Short-term oil price movements will largely depend on developments in the Middle East, particularly the frequency and severity of attacks on shipping, and any escalation of conflict involving Iran. Continued disruptions to shipping in the Strait of Hormuz or the Bab el-Mandeb Strait could further drive up prices, while signs of easing tensions or improved security could reduce the current risk premium.