The world's energy lifeline is still vulnerable

For a few weeks, energy markets had begun to believe the worst was over.

Oil prices had retreated, ships were gradually returning to the Strait of Hormuz and last month's US-Iran framework agreement had raised hopes that one of the world's busiest energy corridors could move closer to normal.

Tuesday's attack on a Qatari liquefied natural gas (LNG) carrier may have challenged that assumption.Iran's Revolutionary Guards fired at least two missiles at commercial ships passing through the Strait of Hormuz on Monday night, according to an Axios report citing two US officials.Also Read: Iran fires missiles at commercial ships in Strait of HormuzThe strike suggests that although large-scale fighting has eased, the threat to commercial shipping has not disappeared.

Instead, the risk facing energy markets is shifting from fears of an all-out regional war to the possibility of repeated disruptions that can unsettle trade, push up prices and remind shipowners that safe passage through Hormuz remains far from guaranteed.The Al Rekayyat, a loaded LNG carrier owned by Qatar's state-run shipping company Nakilat, was reportedly struck during the early hours of Tuesday shortly after leaving the Strait of Hormuz, Bloomberg also reported.Security consultancy EOS Risk Group said, according to Bloomberg, that the vessel was hit around 8 nautical miles, or roughly 15 kilometres, east of Limah on Oman's coast.

The impact triggered a fire, with the consultancy assessing that the projectile was either a drone or a missile.Ship-tracking data indicated that Al Rekayyat appeared to be sailing with its transponders switched off while making the crossing.

Earlier, the UK Maritime Trade Operations had warned of an incident in the area, although it did not identify the vessel involved.Also Read: The likely loser in Gulf's post-war race for oil market shareShipping confidence takes another blow The latest attack comes at a particularly delicate moment for commercial shipping.

Since the US and Israel launched military strikes against Iran in late February, every movement through Hormuz has been closely watched by shipowners weighing the risks of entering or leaving the Persian Gulf.The incident has already prompted signs of caution elsewhere in the market.

Bloomberg said shipping data showed that another LNG tanker, Al Areesh, altered its course on Tuesday after loading cargo in Qatar.

The vessel had previously been signalling Pakistan's Port Qasim as its destination before changing direction.Financial markets reacted quickly.

European natural gas prices climbed by as much as 4.5% during early Asian trading, while Brent crude futures also edged higher after news of the strike spread.The reaction marked a reversal from recent trading sessions, when oil prices had fallen as improving vessel movements through Hormuz encouraged expectations that higher exports could leave global markets with more supply than previously anticipated.Traffic returns, but the route through Hormuz remains dividedShipping activity has picked up since Washington and Tehran agreed to an interim peace framework last month, yet normal operations remain elusive.Iran continues to assert control over parts of the waterway by restricting movements on routes it has not approved and, at times, attacking commercial vessels.

On Monday, a group of Japan-linked ships appeared to pass through Hormuz using a corridor approved by Tehran rather than the route overseen by US-led naval forces.Negotiations aimed at establishing a longer-term arrangement for the strategic waterway have yet to produce a permanent solution, leaving shipowners to make their own judgement on the safest route.Data compiled by intelligence company Kpler Ltd. show that around two-thirds of vessel movements through Hormuz in recent days have used the Iran-approved northern corridor, according to Bloomberg.

The remaining ships have crossed through the US-managed passage near Oman.The split becomes even clearer when examining Monday's traffic.

Of the 25 vessels that crossed the strait, only three travelled along the Omani route with their transponders switched on, despite regional naval forces reminding operators that the US-managed corridor remained open."The continued use of different shipping lanes suggests that traffic through the strait remains operational, but is fragmented as shipowners adopt different routing strategies based on their individual risk assessments," Bloomberg cited Muyu Xu, senior crude oil analyst at Kpler.The attack also lands at an awkward time for Qatar's LNG industry.

Al Rekayyat had reportedly loaded its cargo earlier this month at Ras Laffan, the world's largest LNG export complex.

Any sustained threat to tankers departing Qatar would directly affect the country's efforts to restore normal export flows after months of regional conflict.Who controls Hormuz?The strike on Al Rekayyat comes as Washington and Tehran try to keep diplomacy alive after months of military confrontation.

Rather than being viewed as an isolated security incident, the attack is likely to be seen as a reminder that the agreement reached last month has reduced the intensity of the conflict without removing its underlying source.US President Donald Trump travelled to Ankara, Turkey, for a NATO leaders' summit where the war with Iran is expected to feature prominently.

Indirect talks between the United States and Iran were suspended as Iran began funeral ceremonies for Supreme Leader Ali Khamenei, who was killed on the opening day of the conflict in late February.

Qatar has said negotiations will resume as soon as possible after the ceremonies conclude.

Khamenei is due to be buried in his hometown of Mashhad on July 9.Markets may now be pricing uncertainty instead of warThe latest incident could prove more significant than the physical damage caused to a single vessel.

In recent weeks, investors had increasingly concluded that the risk of a wider regional conflict was fading.

Oil prices retreated from their recent highs, shipping volumes gradually improved and the interim US-Iran framework encouraged expectations that trade through Hormuz would continue to recover.Tuesday's attack complicates that narrative.Instead of eliminating the geopolitical premium built into energy markets, the agreement may simply have altered its nature.

Investors are no longer focused solely on the possibility of a full-scale war.

They now face the prospect that shipping disruptions could reappear whenever negotiations falter or political tensions rise.That creates a different challenge for oil and gas markets.

Rather than preparing for one dramatic escalation, traders may have to contend with recurring periods of instability that repeatedly interrupt confidence without developing into open conflict.A single attack is enough to remind shipowners, insurers and commodity traders that normal commercial activity through Hormuz still depends heavily on political developments beyond their control.The attack also highlights a broader disagreement that extends well beyond the movement of individual ships.Iran increasingly appears to regard the Strait of Hormuz not merely as a strategic waterway but as one of its strongest sources of long-term political and economic influence.

Tehran's position is that if it is expected to safeguard waters along its own coastline, countries benefiting from that security should recognise Iran's role and authority in the region.

Implicit in that argument is the idea that passage through Hormuz cannot be separated from wider regional politics.The United States and Gulf states see the issue very differently.

Accepting any arrangement under which Iran could dictate conditions for passage or derive economic benefits from the route would effectively acknowledge political control over one of the world's most important energy corridors.

Because a substantial share of global oil and LNG supplies moves through the strait, that remains one of the most difficult issues confronting negotiators.As long as that disagreement remains unresolved, any improvement in shipping conditions may prove temporary.Trump renews warning; Tehran rejects US pressureTrump on Monday again warned that Washington would either secure an agreement with Iran or "finish the job," reviving the possibility of military action even as diplomatic contacts remain on hold.Indirect US-Iran talks ended last week without any public indication that the two sides had moved closer to a lasting settlement.

Those negotiations were taking place under a 60-day ceasefire that was intended to create space for diplomacy after US and Israeli strikes triggered the conflict.Also Read: Trump says there will either be a deal with Iran or US will 'finish the job'"We're either going to make a deal or we're going to finish the job.

OK.

And it won't be tough to finish the job.

I'd rather make a deal, because I don't want to affect 91 million people," Trump told reporters in the Oval Office."We can knock down their bridges in one hour, we can knock out their energy supply....

They don't have any money now.

We haven't given them any money."Secretary of Iran's Supreme National Security Council Mohammad Baqer Zolqadr described Trump's remarks as "delusional.""Iranians are unfamiliar with the language of threats.

So speak to the Iranian people with respect, otherwise we will respond in another language," Zolqadr said in comments carried by state media.For energy markets, the exchange reinforces the message delivered by Tuesday's strike.

While the pace of fighting has slowed and diplomatic channels remain open, the dispute over Hormuz is far from settled.

Until there is a durable agreement over security in the waterway, every attack on a commercial vessel is likely to reignite concerns over the stability of global oil and LNG supplies.(With agency inputs) ...