On Friday, oil prices continued to rise amidst growing apprehensions regarding the potential closure of the Strait of Hormuz. Iran, in collaboration with Oman, proposed a ban on vessels considered hostile from transiting the strait and suggested imposing significant fines on those who disregard these new regulations.
By 0303 GMT, Brent crude futures increased by 80 cents, or 0.97%, reaching $83.29 per barrel, while U.S. West Texas Intermediate (WTI) futures climbed 64 cents, or 0.83%, to $77.93.
Oil futures had surged by over $3 a barrel on Thursday as Iran deliberated a bill that would restrict U.S. and Israeli vessels from entering the Strait of Hormuz, a crucial waterway through which approximately 20% of the world’s oil and liquefied natural gas is transported, particularly since the onset of the conflict in late February.
Earlier in the week, prices had decreased as prospects for a resolution to the ongoing conflict seemed more feasible. However, Brent crude surpassed the $80 mark on Thursday after dipping below that threshold for the first time since July 13. Both benchmarks were trending toward a weekly decline of about 8%.
Market analysts indicated that recent developments suggest that tensions between Iran and the United States are far from resolved. Lin Ye, vice president of oil commodities at Rystad Energy, noted, “The immediate catalyst is the specific nature of Iran’s proposed draft for transit regulations in Hormuz, which would prohibit U.S. and Israeli vessels and require other nations labeled as ‘hostile’ to pay fees for passage.”
Ye further explained, “This is not merely the market reacting to an unfavorable agreement; it signifies that any future arrangement will be a controlled corridor rather than a return to regular shipping routes.”
An Iranian lawmaker revealed that a parliamentary committee is currently examining a preliminary proposal to bar U.S., Israeli, and other hostile vessels from the Strait of Hormuz, with fines for violators potentially reaching 20% of the cargo’s value, as reported by Fars news agency.
Iran is reportedly looking to impose fees between 5% and 7% of cargo values for ships utilizing the strait, while Oman is considering a lower fee of around 3%. In contrast, the United States is advocating for no fees to be charged at all.
However, four industry sources have indicated that the proposed agreement faces significant challenges due to U.S. sanctions and restrictive insurance requirements surrounding any payments.
Vandana Hari, founder of Vanda Insights, an oil market analysis firm, remarked, “The recent signals regarding a potential Iran-Oman transit agreement have led to significant fluctuations in market sentiment, leaving uncertainty about what conditions need to be met for a finalized deal.”
In related news, the Houthi movement in Yemen announced that they executed missile and drone strikes on “Saudi deployments” in the regions of Marib and Hadramout on Thursday.
Meanwhile, U.S. President Donald Trump expressed optimism on Thursday, stating that he believes the conflict will come to a close soon.
