Oil prices experienced a decline on Friday but still posted substantial gains over the week due to escalating military tensions between the United States and Iran. These tensions have heightened fears about global energy supplies and the security of shipping through the Strait of Hormuz.
At the close of the week, Brent crude was priced at $76.01 per barrel, while the U.S. benchmark, West Texas Intermediate (WTI), settled at $71.41 per barrel. Despite the drop on Friday, Brent recorded a weekly increase of more than 5%, and WTI saw a rise of nearly 4%. This upward trend was primarily driven by concerns over potential disruptions in oil supply.
The volatility in crude prices throughout the week was largely attributable to military exchanges between the two countries, which have cast uncertainty over the Strait of Hormuz, a critical route for oil transit worldwide. However, market sentiment saw a slight improvement following reports that the U.S. remains open to diplomatic solutions with Iran, even amidst ongoing military tensions.
Adding to the pressure on global supply, Washington’s decision to revoke a waiver that allowed limited Iranian oil exports has intensified concerns. Meanwhile, shipping activity through the Strait of Hormuz has noticeably decreased, with fewer large oil tankers navigating the passage. Iran has issued warnings of potentially further restricting commercial traffic if military operations continue, while the U.S. has committed to ensuring the freedom of navigation in the area.
Analysts predict that oil prices will remain unpredictable as investors stay vigilant, closely following developments in the Middle East and any potential progress in reducing the conflict.