- Navigation in the Strait of Hormuz remains almost at a standstill after the fighting.
- Tanker traffic is disrupted as shipowners assess safety risks.
- Hormuz managed about 20% of the world’s oil and gas supplies before the war.
Oil prices rose on Friday and are expected to see weekly gains on renewed fears of supply disruptions in the key producing Middle East region after renewed fighting between the United States and Iran this week reduced shipping through the Strait of Hormuz.
Brent crude futures were up 19 cents, or 0.25%, at $76.49 a barrel at 0319 GMT. U.S. West Texas Intermediate (WTI) crude gained 19 cents, or 0.26%, to $72.27.
For the week, Brent is expected to gain around 6% and WTI is headed for a 5% rise.
“Prices have retreated from mid-week highs, but there is still a substantial risk premium as transits from Hormuz are back to near-standstill with no clear sign as to when normal reopening might resume,” said Vandana Hari, founder of oil market analytics provider Vanda Insights.
“However, it appears that the market’s confidence in the return to diplomacy of the United States and Iran to resolve the problem is limiting the upside,” Hari added.
Iran’s armed forces launched attacks on US military infrastructure in Gulf states on Thursday, following US strikes on Iran’s southern and eastern coastal provinces, further straining a three-week-old ceasefire.
Furthermore, Iranian media reported several explosions in southern Iran, notably in Bushehr, where one of the country’s nuclear power plants is located.
The renewed fighting came on the day Iran buried its slain supreme leader, Ayatollah Ali Khamenei, the culmination of a week of funeral processions and massive rallies. Khamenei was killed on the first day of the war, February 28.
The renewed fighting has delayed the full reopening of the Strait of Hormuz, which before the war carried about 20% of the world’s daily oil and gas supplies.
Tanker traffic crossing the strait was virtually at a standstill on Thursday, ship tracking data showed, as shipowners assessed the risk from the latest strikes, which began after Iran hit a Qatari LNG ship exiting the waterway near Oman.
US President Donald Trump nevertheless said on Wednesday that he did not believe the war would resume due to renewed fighting and that “whatever happens will be over very quickly”.
“Despite intensifying US attacks on military sites in Iran, the market has been somewhat reassured by the Trump administration’s decision to avoid targeting Iranian energy infrastructure,” said Daniel Hynes, senior commodities strategist for ANZ Bank.
“This was facilitated by comments from President Trump, who said he did not expect a return to full-scale conflict.”
