Kathmandu— Oil prices surged on Wednesday as renewed attacks on commercial vessels in the Middle East dampened hopes for a swift resolution to disruptions impacting the crucial Strait of Hormuz. Brent crude, the international benchmark, jumped over 2 percent overnight, nearing $90 per barrel and marking a significant increase of 24 percent since late February. The escalating violence and stalled diplomatic efforts are fueling concerns about global oil supplies, with analysts predicting sustained prices in the $85-$90 range.

Attacks Disrupt Shipping

Yemen’s internationally recognised government accused Iran-aligned Houthis of killing six people in missile attacks on a commercial vessel in the Bab al-Mandeb strait. The coastguard reported that two members of security forces were among the casualties, having been deployed to a rescue mission following the initial attack. Simultaneously, US Central Command stated it had disabled a Panama-flagged cargo vessel attempting to breach a blockade of Iranian ports.

Negotiations Stall Amid Demands

Talks between Oman and Iran regarding the Strait of Hormuz are reportedly at an advanced stage, with Qatar expressing hope for its swift reopening. However, Tehran maintains that these discussions are separate from the issue of restoring traffic through the strait, insisting on preconditions such as war reparations and the lifting of sanctions before allowing normal passage. Despite claims by US President Donald Trump asserting total control over the waterway, maritime traffic remains drastically reduced.

Reduced Traffic and Long-Term Outlook

Data from maritime intelligence firm Windward reveals a significant decrease in vessel transits through the Strait of Hormuz; only 10 ships passed on Monday compared to approximately 130 daily before the conflict. The US Energy Information Administration forecasts that Middle Eastern oil production will not return to pre-conflict levels until early 2027, projecting an average Brent price of $87 per barrel in 2026. According to June Goh, a senior oil market analyst at Sparta Commodities in Singapore, “OPEC crude production can only increase once there is a normalcy in flows in both directions through the Strait of Hormuz.”

Market Sentiment Shifts

Analysts note a growing skepticism regarding the prospects for a quick resolution. Tim Waterer, chief market analyst at KCM Trade, observed that “markets have not completely lost hope for a deal, but confidence is clearly eroding,” adding that optimism from earlier in the month is being replaced by a more cautious, risk-premium driven stance.

Oil prices are expected to remain supported around $85-$90 per barrel unless significant progress is made in diplomatic talks or unforeseen circumstances alter the supply outlook.

(With inputs from Al Jazeera)

Originally published on abcnews.com.np.