Oil prices rose sharply on Friday as tensions around the Strait of Hormuz persisted despite a fragile U.S.-Iran ceasefire, while attacks on Saudi Arabia's energy infrastructure further disrupted global supply.
Core Developments
- Oil Prices Rise: Brent crude futures climbed 0.87% to $96.75 per barrel, while West Texas Intermediate (WTI) futures gained 1.06% to $98.91 per barrel.
- Strait of Hormuz Closure: The vital shipping lane, handling 20% of global oil supply, remains largely shut, with only a few tankers passing through despite the ceasefire.
Market Reaction and Analysis
Analysts note that initial relief from the two-week ceasefire has faded amid ongoing fighting and Iran's insistence on charging fees for ships transiting the strait. The U.S. and Western leaders oppose this demand, calling it a violation of the agreement.
Saudi Production Cuts
Attacks on Saudi Arabia's oil facilities have reduced output by 600,000 barrels per day (bpd) and slashed East-West Pipeline throughput by 700,000 bpd, according to the Saudi Press Agency. Analysts warn that if the Strait of Hormuz remains closed, Brent prices could surge to $190 per barrel.
Geopolitical Tensions
U.S. President Donald Trump warned Iran to stop charging tankers, while Iranian officials accused the U.S. and Israel of violating the ceasefire. Negotiations in Pakistan aim to secure a more durable peace, but analysts doubt Pakistan's leverage to reopen the strait.
Market Volatility
Oil prices initially plunged after the ceasefire announcement but rebounded as fighting continued and the strait remained closed. Futures markets reflect lingering uncertainty, with Brent prices fluctuating near $100 per barrel.