Oil prices saw a decline on Friday but achieved notable weekly gains amid rising military tensions between the United States and Iran, stoking fears about global energy supplies and the security of shipping through the Strait of Hormuz. Brent crude concluded the session at $76.01 per barrel, and the US benchmark, West Texas Intermediate (WTI), closed at $71.41 per barrel. Despite the dip on Friday, Brent increased by over 5% for the week, and WTI rose nearly 4%, primarily driven by concerns over potential disruptions in supply.
Throughout the week, crude prices experienced significant volatility as the two nations engaged in military exchanges, heightening uncertainty surrounding the safety of the Strait of Hormuz, which is crucial for global oil transit. The situation was somewhat alleviated by reports suggesting the US is still open to diplomatic dialogue with Iran, despite the ongoing military friction. Nevertheless, tension increased after the US revoked a waiver permitting limited Iranian oil exports, thereby exerting additional pressure on global oil supplies.
The Strait of Hormuz has witnessed a noticeable slowdown in shipping activity, with fewer large oil tankers navigating the route. Iran has issued warnings that it might further limit commercial traffic if military actions continue, while the United States has committed to ensuring the free navigation of this key maritime passage.
Analysts anticipate that oil prices will likely remain unpredictable as investors keep a close watch on the Middle East situation and any potential diplomatic developments that might ease the conflict. The geopolitical landscape in the region is a critical factor influencing market sentiment and could lead to further fluctuations in oil prices.