Oil prices experienced an increase on Friday as tensions escalated between the United States and Iran, leading to intensified military actions in the Gulf region. This renewed conflict has disrupted the flow of oil through the Strait of Hormuz, with Iran instructing the Houthi political and military group to be prepared to obstruct the Red Sea export route.
At 0312 GMT, Brent crude futures rose by 70 cents, approximately 0.83%, reaching $84.93 per barrel. Simultaneously, U.S. West Texas Intermediate (WTI) futures increased by 81 cents, or 1.03%, to $79.76 a barrel, recovering from the losses experienced in the previous trading session.
Over the past week, both benchmark oil contracts have surged nearly 12%, with Brent set to achieve its third consecutive weekly gain, while WTI is on track for its second straight weekly increase.
Tim Waterer, chief market analyst at KCM Trade, remarked on the situation, stating, “The looming threat of the Red Sea becoming another significant point of supply disruption adds complexity to the global oil market.” He emphasized that this “dual-risk scenario” is sustaining a geopolitical premium for both oil benchmarks.
In a significant escalation, the U.S. executed two major airstrike campaigns on Wednesday, targeting areas close to Iran’s southern coastline. This marked the first such strikes since a ceasefire agreement was established last month. Attacks continued into Thursday.
Additionally, Qatar’s defense ministry announced that its military successfully intercepted an Iranian missile attack early Friday morning, with reports indicating that a child sustained injuries from shrapnel during the interception efforts.
Fatih Birol, the Executive Director of the International Energy Agency, highlighted the ongoing concerns regarding oil security during a discussion at the Council on Foreign Relations in Washington on Thursday. He expressed his worry about the situation, stating, “We should be concerned, and I am indeed worried if the circumstances do not improve in the upcoming weeks.”
The U.S. Central Command reported that American forces initiated “a new wave of strikes against Iran for the sixth consecutive night to further diminish Iranian military capabilities,” commencing at 2 p.m. EDT (1800 GMT), which corresponds to 9:30 p.m. in Tehran.
In retaliation, Iran has launched missiles and drones targeting U.S. military installations in neighboring countries, including a recent attack on a newly expanded air base in Jordan.
Moreover, Iranian leadership has urged its Houthi allies to be ready to close the Red Sea oil route if the U.S. continues to strike Iranian infrastructure, according to three sources familiar with the matter. Analysts from IG noted that WTI could potentially rise into the mid-$80s if it maintains its position above critical support levels in the mid-$70s.
