Morning Highlights: Brent Surges to $87, Highest Since June 12; U.S. Reinstates Iran Naval Blockade, Two ADNOC Tankers Hit by Iranian Missiles, Dubai Curve Flips to Backwardation

Tuesday, July 14, 2026 | 6:30 AM ET

Brent (September) $87.21 | WTI (August) $80.89 Brent +3.91 (+4.7%), WTI +2.75 (+3.5%), highest levels since before the MOU was signed on June 17. Dubai forward curve has flipped from contango back into backwardation, with August trading at a $1.35 to $1.40 premium to September versus a 25 to 30 cent discount on Monday. Oman futures at a $2.50 to $3.00 premium to Dubai versus a $1.50 discount a day earlier. U.S. reinstates Iran naval blockade and proposes 20% Hormuz escort fee; Iranian cruise missiles hit two ADNOC tankers in Hormuz, one seafarer killed; Dubai curve flips to backwardation for first time in four weeks; Houthis fire missiles at Saudi Arabia; Ukraine strikes two Russian refineries overnight.

The MOU lasted less than four weeks before the situation reverted to something close to where it started. The market is trying to price what it means that a signed deal fell apart this quickly. The answer from the physical market is unambiguous: Dubai in backwardation for the first time in four weeks, Oman at a $2.50 to $3.00 premium to Dubai, Murban prompt timespreads back in backwardation. The crude curve is pricing acute near-term tightness again, not the 2027 surplus that defined the narrative three weeks ago.

The attack on the two ADNOC tankers -the Al Bahyah and Mombasa B, hit by Iranian cruise missiles with one seafarer killed goes far beyond the headline. These are not third-party vessels that happened to be transiting. The Al Bahyah is an ADNOC Logistics and Services vessel and the Mombasa B is operated by Sinokor Group under a time charter to ADNOC. Sinokor has been one of the primary movers of UAE crude through Hormuz since the conflict began, and this is at least the second Sinokor vessel attacked since the MOU was signed. The UAE has issued a strong sovereignty statement reserving its full right to respond. If ADNOC and its chartered fleet curtail Hormuz operations in response, the UAE's record export volumes of 3.7 to 3.8 million bpd in June - the primary driver of the Gulf export recovery - stop. That is the supply consequence that the market is beginning to price this morning.

The U.S. reimposing the Iran naval blockade and proposing a 20% fee for escorting vessels through Hormuz changes the commercial calculus for every tanker operator in the region. A 20% fee on top of already elevated war risk insurance premiums, in an environment where Iranian cruise missiles are hitting named vessels, effectively prices most commercial operators out of Hormuz unless they have specific cargo economics that justify the cost. For crude buyers, that means Middle Eastern barrels become structurally more expensive by the freight and security cost differential, which is itself a form of price support for the flat price.

The Houthi missile attack on Saudi Arabia following alleged Saudi strikes on a Houthi-controlled airport opens another front. Gabelli's Simon Wong correctly flagged the risk - if the Houthis extend attacks to Saudi crude and products in the Red Sea, Yanbu loses its status as the safe alternative export route that has underpinned Saudi Arabia's ability to export throughout the conflict. Saudi Arabia currently relies on the East-West pipeline to Yanbu for a substantial share of its exports given Ras Tanura's difficult access through Hormuz. A Red Sea threat would leave Saudi Arabia with very limited export capacity, and Brent at $87 could look cheap quickly in that scenario.

Top Developments

U.S. Reinstates Iran Naval Blockade, Proposes 20% Hormuz Escort Fee

The U.S. reimposed a naval blockade of Iranian shipping and President Trump proposed charging a 20% fee to guard Hormuz transits. The reimposition of the blockade formally ends the sanctions relief framework that had allowed Iranian crude sales during the MOU period and signals a return to maximum pressure posture. A 20% escort fee on top of elevated war risk insurance premiums materially increases the delivered cost of Middle Eastern crude for all buyers regardless of origin, providing structural flat price support even in a scenario where physical volumes partially recover. ANZ flagged that the peak of escalation may be behind us but that continued disruptions keep prices in the $85 to $90 range.

Iranian Cruise Missiles Hit Two ADNOC Tankers, One Seafarer Killed

Iranian cruise missiles struck ADNOC Logistics and Services vessel Al Bahyah and Sinokor-operated Mombasa B, chartered to ADNOC, causing significant damage to both and killing one crew member with several others injured. The UAE Defence Ministry reserved its full right to respond and said it would take all necessary measures to protect its sovereignty and national interests. Sinokor has been a primary mover of UAE crude through Hormuz since the conflict began and has now been attacked at least twice since the MOU was signed. The attacks directly threaten the UAE's ability to sustain the record export volumes of 3.7 to 3.8 million bpd that drove the June Gulf flow recovery. Dubai's forward curve flipped from contango back into backwardation immediately following the attacks, with August at a $1.35 to $1.40 premium to September versus a 25 to 30 cent discount the day before.