Oil prices continued to climb on Friday as uncertainty surrounding future access to the Strait of Hormuz offset earlier optimism over a possible diplomatic breakthrough. Investors remained focused on proposals from Iran and Oman that could reshape shipping conditions through one of the world’s most important energy corridors.
By 06:34 GMT, Brent crude futures had gained 85 cents, or 1.03%, to $83.34 per barrel, while US West Texas Intermediate (WTI) crude rose 52 cents, or 0.67%, to $77.81 per barrel.
Iran’s Shipping Proposal Fuels Supply Concerns
Thursday’s rally followed reports that Iran is reviewing legislation that would prevent US and Israeli vessels from using the Strait of Hormuz, a route that handled around 20% of global oil and LNG shipments before the conflict began at the end of February.
Although crude prices had fallen earlier in the week amid hopes of a diplomatic agreement, Brent recovered above $80 after briefly dropping below that threshold for the first time since mid-July. Even so, both Brent and WTI remain on track to record weekly losses of roughly 8%.
Traders Assess New Transit Rules
Market participants believe this week’s developments suggest that tensions between Tehran and Washington remain unresolved.
According to Iran’s Fars news agency, lawmakers are considering draft legislation that would prohibit vessels classified as hostile from using the Strait of Hormuz and impose penalties of up to 20% of cargo value on ships violating the proposed rules.
Lin Ye, Vice President of Commodities Markets – Oil at Rystad Energy, said investors are reacting to Iran’s proposed framework for managing maritime traffic.
“That’s not the market pricing in a bad deal, it’s pricing in confirmation that whatever emerges is a managed/conditional corridor, not a restoration of normal flow,” Ye added.
Reports indicate that Iran is seeking transit charges of between 5% and 7% of cargo value, while Oman has discussed a fee closer to 3%. The United States continues to oppose any shipping charges.
Several industry sources believe implementing such an agreement would prove difficult because of US sanctions and insurance restrictions.
Geopolitical Risks Continue to Support Oil
Vandana Hari, founder of Vanda Insights, said recent headlines have generated significant swings in market sentiment but noted that traders still lack clarity over the conditions required to finalise an agreement.
Meanwhile, Yemen’s Houthi movement claimed responsibility for missile and drone attacks targeting “Saudi deployments” in Marib and Hadramout.
US President Donald Trump also said he believes the conflict will end “soon”, although investors continue to factor geopolitical uncertainty into energy prices.
Leave a Reply