Amid escalating military tensions between the United States and Iran, oil prices fell on Friday but still registered significant gains for the week. The heightened conflict has raised alarms over the security of global energy supplies, particularly concerning the transport of oil through the crucial Strait of Hormuz.
Brent crude closed the week at $76.01 per barrel, while the US benchmark, West Texas Intermediate (WTI), ended at $71.41 per barrel. Despite the decline by week’s end, Brent saw an increase of over 5% for the week, and WTI climbed nearly 4%, largely driven by fears that the ongoing conflict could disrupt supplies.
Throughout the week, oil prices experienced considerable volatility as the US and Iran engaged in military exchanges, casting doubt on the security of the Strait of Hormuz. This strait is one of the world’s most critical oil transit points, and any threat to its security can have wide-reaching implications for the energy market.
While reports suggested a slight improvement in market sentiment due to the US’s willingness to engage in diplomatic discussions with Iran, concerns remained high. These worries were exacerbated by Washington’s decision to revoke a waiver that had permitted limited Iranian oil exports, further straining global supply chains.
The Strait of Hormuz has seen a notable decrease in shipping activity, with fewer large oil tankers navigating the waterway. Iran has issued warnings about potentially tightening restrictions on commercial traffic if military actions continue, while the US has vowed to ensure the freedom of navigation. Analysts anticipate that oil prices will continue to be unpredictable as the situation in the Middle East develops and efforts to de-escalate the conflict unfold.