Crude oil prices fell roughly 2 percent on Thursday after Saudi Arabia proposed forming a multinational naval coalition aimed at protecting shipping lanes through the Strait of Hormuz and the Red Sea from Iranian attacks, according to Ship & Bunker.
The report states that the Saudi Defense Ministry confirmed more than 40 countries took part in a meeting focused on “strengthening maritime defence cooperation and unifying efforts to protect the security of maritime passages.” Ship & Bunker reports that the proposed coalition would include Gulf Cooperation Council members Saudi Arabia, Kuwait, Qatar and Bahrain, alongside Pakistan, Turkey, Egypt and Jordan.
Market Reaction
According to Ship & Bunker, the coalition proposal reversed earlier price gains that had followed a wave of U.S. strikes on Iran, launched in response to attacks on American forces in Jordan. That two-hour campaign reportedly targeted military command centers, missile and drone facilities, coastal surveillance sites, and maritime defence capabilities.
Brent crude dropped nearly 2 percent to settle at $89.03 per barrel, while West Texas Intermediate fell about 1 percent to settle at $83.59 per barrel, Ship & Bunker reports. Despite the daily decline, both benchmarks remained on pace for a 21 percent monthly gain — the largest since March.
John Kilduff, founding partner at Again Capital, told Ship & Bunker that efforts to secure Hormuz and the Bab el Mandeb passage have introduced expectations of a supply surge once tensions ease, which he said is limiting any sharp price rally. Tim Waterer, chief market analyst at KCM Trade, offered a contrasting view, stating that “until safe passage through the Strait of Hormuz is no longer a gamble, the risk premium in oil is not going anywhere,” and that the market continues to price in the reality of ongoing strikes despite diplomatic hopes.
Saudi Fiscal Update
Separately, Ship & Bunker reports that Saudi Arabia’s finance ministry disclosed a sharp narrowing of its quarterly budget deficit, which fell to 34.3 billion riyals ($9.1 billion) in the second quarter, down from 125.7 billion riyals in the first quarter. Oil revenue rose 28 percent quarter-on-quarter amid escalating crude prices, while spending declined 3.5 percent. The oil sector itself contracted nearly 25 percent during the period, according to the report.
Does This Matter to You?
Developments around security in the Strait of Hormuz and the Bab el Mandeb corridor carry direct relevance for vessel routing, freight costs, and bunker fuel pricing, given these chokepoints’ role in global crude and product flows. A proposed protective coalition, if implemented, could influence risk premiums currently built into freight and insurance costs for vessels transiting these waters. At the same time, continued volatility — as noted by analysts cited in the report — suggests that pricing and routing risk in the region may persist even amid diplomatic progress. The source material does not provide further detail on how or when any coalition operations might begin, so the direct operational impact remains unclear at this stage.
Gulf Bunkering does not provide operational or security guidance. This article is for informational purposes only. Operators should consult flag state authorities, P&I clubs, and relevant advisories for decisions relating to transit planning.
Sources: Ship & Bunker
