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The global bitumen market faced mounting pressure as Hormuz Strait traffic nearly stopped and the Red Sea emerged as a second shipping chokepoint. Brent crude climbed above $96, while freight costs, war-risk premiums, and supply disruptions became more influential than FOB prices.
The energy market faced more than the continuation of US attacks on Iran this week. The conflict expanded across both the Persian Gulf and the Red Sea. The US military carried out its twelfth consecutive night of strikes on Iran, while Iran said it had targeted US-linked military sites in Jordan, Kuwait, and Bahrain. For the market, the main risk is no longer the number of attacks, but the expansion of the conflict toward energy infrastructure and two of the region’s most important oil export routes.
Iran has declared Hormuz Strait completely closed for as long as US military operations continue. Kpler data showed that only three vessels passed through the strait on Wednesday, July 22, compared with around 18 vessels on the same day a week earlier.
The recorded traffic included one product tanker, one bulk carrier, and one other vessel, but no crude oil tanker or LNG carrier was reported.
The Houthis claimed missile and drone attacks against two Saudi tankers, Encelia and Layla, in the Red Sea and announced a maritime blockade against Saudi Arabia.
Saudi Arabia confirmed that Encelia had been hit and that a fire broke out in the forward section of the vessel, while the reported attack on Layla has not yet been independently confirmed. At the same time, several tankers carrying Saudi oil to China and India changed their routes.
Donald Trump has threatened that for every vessel attacked by Iran, the United States will strike a bridge or power plant in Iran.
Iran has warned that if these threats are carried out, it could target oil, gas, electricity, and economic infrastructure across the region and prevent oil exports from leaving the area.
Against this background of escalating threats, mediators have proposed a ten-day ceasefire aimed at reviving the previous interim arrangement. However, no final agreement between the two sides has been announced.
Brent crude, which had already moved above the low-$80 range during the previous week, rose by around 2.3% to $96.27 per barrel on July 23.
The main driver was not an immediate and confirmed shortage of crude oil, but growing concern over simultaneous disruption in Hormuz Strait and the Red Sea route, tanker diversions, and a gradual reduction in accessible supply.
The market is now paying a war-risk premium for two major shipping routes instead of one.
According to international market assessments, Singapore HSFO 180 CST was valued at around $595 per metric ton, while Singapore bitumen was assessed at approximately $600 to $610. South Korea bitumen prices were reported at around $517 to $531.
China bitumen prices also increased because of limited supply and higher feedstock costs. However, rainfall, weak project activity, and cautious purchasing prevented the full increase in crude oil and fuel oil prices from passing into the bitumen market.
The India bitumen market is moving in two different directions at the same time. Domestic refinery prices fell sharply because of the monsoon season, while the continuing conflict in the Persian Gulf increased the cost of imported bitumen. As a result, the gap between refinery prices and workable delivered prices in India may widen further over the coming weeks.
In Europe, higher HSFO prices and limited supply pushed export bitumen prices into an overall range of around $497 to $522 per metric ton.
Bahrain bitumen remained close to $550 for the sixth consecutive month.
With commercial traffic through Hormuz Strait falling close to zero and US attacks affecting Bandar Abbas and surrounding areas, Iran bitumen exports have almost completely stopped.
The market is still waiting for a positive signal that could allow shipments to restart. Iran bitumen prices remain around the levels seen before the latest round of attacks.
For the bitumen market, higher Brent crude and fuel oil prices are only part of the issue. When vessels do not enter the Persian Gulf, or shipowners are unwilling to accept the route, freight rates, war-risk insurance, waiting times, and potential demurrage can rise much faster than FOB prices.
Under these conditions, a lower price at origin does not necessarily mean a cheaper cargo at destination. The ability to load and deliver the cargo has once again become a central part of the transaction’s real value.
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