Key points

  • Brent crude edged toward $97 a barrel as renewed US‑Iran hostilities sparked concerns over a lasting supply squeeze.
  • OPEC+ decided to keep its October production programme unchanged, signalling no immediate offset to the market shock.
  • Iran announced the creation of a restricted maritime zone surrounding the Strait of Hormuz, limiting civilian vessel movements.
  • Data from Kpler show tanker traffic through the Hormuz chokepoint fell to its lowest level since May, underscoring heightened market anxiety.

The escalation of attacks between Washington and Tehran has pushed global oil benchmarks to their highest levels in weeks. Brent futures, which were hovering just below $97 per barrel on Friday, rose on expectations that any prolonged disruption to the narrow Strait of Hormuz—a conduit for roughly a fifth of the world’s petroleum trade—would tighten supplies and keep prices elevated. Analysts note that the current price trajectory could persist until diplomatic channels produce a de‑escalation or alternative routing options become viable.

Meanwhile, the OPEC+ alliance, which comprises the world’s leading oil producers, opted not to adjust its output quotas for October. The decision reflects the group’s assessment that existing production levels are sufficient to balance the market, even as geopolitical risk premiums climb. By leaving the policy unchanged, OPEC+ signals confidence in its ability to absorb short‑term shocks, but the move also leaves buyers vulnerable to price spikes driven by external factors beyond the cartel’s control.

Iran’s declaration of a “restricted zone” around the Strait of Hormuz adds another layer of uncertainty. The measure, intended to safeguard Iranian naval operations, effectively bars commercial tankers from navigating the most direct route between the Persian Gulf and the open ocean. Shipping companies have already begun rerouting vessels around the longer, costlier Cape of Good Hope path, a shift that could inflate freight rates and delay deliveries of refined products worldwide.

For Pakistan, the surge in oil prices reverberates through several sectors. Higher crude costs translate into increased gasoline and diesel prices at the pump, tightening household budgets in a country already grappling with inflationary pressures. The nation’s energy‑intensive industries, such as textiles and fertilizers, may face squeezed margins, prompting calls for a review of subsidy schemes and a faster transition to alternative energy sources. Moreover, any sustained disruption in Hormuz could affect Pakistan’s oil imports, which rely heavily on shipments from the Middle East, potentially prompting the government to seek diversified supply lines or strategic fuel reserves.