Brent and WTI remain sharply higher for the week as attacks near the Strait of Hormuz and Red Sea raise concerns over prolonged supply disruptions.
Web Desk: Global oil prices remained sharply elevated on Friday and were on track to finish the week above $100 a barrel for the first time since mid-May, as escalating attacks around key Middle East shipping routes raised fears of prolonged supply disruptions.
Brent crude futures had risen earlier in the session, reaching $108.44 a barrel, while US West Texas Intermediate (WTI) climbed to $103.17. Both benchmarks had gained more than 6% on Thursday.
However, oil prices later reversed course after reports emerged that Middle Eastern foreign ministers were working on a temporary arrangement with Iran to manage shipping through the Strait of Hormuz. By later trading, Brent had fallen more than 3% to around $103.88, while WTI dropped to about $99.15.
Middle East Shipping Disruptions Drive Market Fears
The sharp moves in crude prices reflect growing concerns that the conflict in the Middle East could disrupt energy supplies for an extended period.
The Strait of Hormuz, through which roughly one-fifth of global daily oil and liquefied natural gas supplies moved before the current war, has seen a significant decline in vessel traffic. Preliminary tracking data showed only seven vessel transits on Thursday, compared with 11 the previous day and a 10-day average of 15.
Iran said it attacked 10 ships near the Strait of Hormuz on Wednesday after the United States struck five Iranian oil tankers. Iran’s Islamic Revolutionary Guard Corps also warned that it would escalate its response to further attacks.
Houthi Advance Adds Pressure on Red Sea Routes
The oil market is also facing additional risks from developments around the Red Sea.
Iran-aligned Houthis seized control of Yemen’s Mocha port on Thursday, increasing concerns over commercial shipping near the Red Sea and the strategically important Bab al-Mandab route.
At the same time, attacks on Saudi energy facilities have widened concerns beyond the immediate disruption around Hormuz.
Analysts say the combination of restrictions in the Gulf, attacks on energy infrastructure and threats to Red Sea shipping could keep global oil markets highly volatile.
Weekly Gains Remain Strong
Despite Friday’s decline, both major benchmarks remained significantly higher for the week.
Reuters reported that the benchmarks were trading nearly 13% higher on a weekly basis earlier Friday, putting the market on course for its strongest weekly increase since the week ended July 17.
The price surge comes after Brent crossed the $100 threshold earlier in the week for the first time since July, reflecting the market’s growing concern about physical supply disruptions.
UBS energy analyst Giovanni Staunovo said reports of possible talks in the Middle East were weighing moderately on prices but warned that near-term risks remained to the upside and that high volatility was likely to continue.
US Diesel Prices Hit Record High
The disruption is also being felt in refined fuel markets.
The US national average diesel price exceeded $6 a gallon for the first time on Thursday, according to price tracker GasBuddy. The increase has been linked to supply disruptions from the Iran war as well as Ukrainian attacks on Russian refineries.
Analysts warned that refined products such as diesel could remain under greater upward pressure while Gulf shipping restrictions and Russian refinery outages continue.
Commerzbank raised its year-end Brent forecast to $85 a barrel from $75, while also increasing its forecasts for jet fuel and diesel prices.
Outlook Remains Uncertain
The outlook for crude prices will depend heavily on whether shipping through the Strait of Hormuz and other regional routes returns toward normal levels.
A temporary agreement involving Iran could ease immediate market pressure, but continued military activity and threats to commercial shipping could quickly push prices higher again.
Analysts are also watching demand from China, the world’s largest crude importer. Strong Chinese purchases could amplify the impact of supply disruptions and provide additional support to prices.
For now, the oil market remains highly sensitive to developments in the Iran conflict, the Strait of Hormuz and the Red Sea.
