Oil prices saw a decline at the close of trading on Friday, yet they achieved substantial weekly gains due to escalating military tensions between the United States and Iran. These tensions have sparked fears about the security of global energy supplies and the impact on shipping through the critical Strait of Hormuz.
By the end of the week, Brent crude was priced at $76.01 per barrel, and the US benchmark, West Texas Intermediate (WTI), settled at $71.41 per barrel. Despite the dip on Friday, Brent crude rose by more than 5% over the week, while WTI saw nearly a 4% increase. These gains were primarily driven by concerns regarding potential disruptions in oil supply.
The week was marked by significant volatility in crude prices as military strikes were exchanged between the US and Iran, leading to heightened uncertainty about the safety of the Strait of Hormuz, a crucial channel for oil transit worldwide. The market experienced a slight improvement in sentiment following reports that the US remains open to diplomatic discussions with Iran, despite the ongoing military tensions.
Further complicating the situation, Washington’s decision to revoke a waiver permitting limited Iranian oil exports has added pressure to the global supply chain. This move has coincided with a noticeable slowdown in shipping activities through the Strait of Hormuz, as fewer large oil tankers navigate the passage. Iran has issued warnings about potentially restricting commercial traffic further if military actions continue, while the US has committed to safeguarding the freedom of navigation in the area.
As analysts monitor the evolving situation in the Middle East, they predict that oil prices will likely remain unpredictable. Investors are keeping a close eye on any developments that could lead to a de-escalation of the conflict, which would have significant implications for the global oil market.