Oil prices are on track to end the week significantly higher on Friday as renewed military tensions between the United States and Iran, combined with persistent security risks in the Strait of Hormuz, have revived concerns over potential disruptions to global energy supplies. International benchmark Brent crude futures for November delivery traded at $94.77 per barrel at 3:29 p.m. local time (1229 GMT) on Friday, representing a 7.6% gain from last Friday's close of $88.10. US benchmark West Texas Intermediate (WTI) crude futures for October delivery traded at $90.34 per barrel, up 8.3% from $87.06 a week earlier.
The primary driver of oil price increases has been the escalation in hostilities between Washington and Tehran. US forces struck targets on Iran's Larak Island near the Strait of Hormuz over the weekend, prompting Iranian retaliation through missile and drone attacks against sites used by US forces across the region. The escalation continued throughout the week, with the US targeting areas around the Strait of Hormuz and southern Iran, while Tehran reported strikes on several locations including Qeshm Island, Bandar Abbas, Asaluyeh, Chabahar and Konarak.
Iran's Islamic Revolutionary Guard Corps (IRGC) stated that the attacks had "further tightened the lock on the Strait of Hormuz," reinforcing market concerns that continued hostilities could prolong disruptions to energy flows from the Gulf. Security risks to commercial shipping remained elevated throughout the week, with the UK Maritime Trade Operations (UKMTO) reporting that a tanker had been struck by three unknown projectiles while exiting the Strait of Hormuz off Oman on Tuesday. Iran also reported that it had laid additional naval mines in the strait and claimed that oil tankers attempting to pass through unauthorized routes had struck mines.
Before the conflict, approximately 20 million barrels per day of crude oil and petroleum products moved through the Strait of Hormuz, accounting for a significant share of global seaborne oil trade. The persistent risk of disruption added a geopolitical risk premium to crude prices, pushing Brent above $95 per barrel during the week. However, developments later in the week began to temper price gains.
Reports indicated a sharp recovery in oil flows through the Strait of Hormuz, coupled with signals from Washington that it does not seek a prolonged conflict with Iran. US President Donald Trump stated this week that Washington was "controlling" the Strait of Hormuz and that US forces were helping commercial vessels move through the waterway. US Energy Secretary Chris Wright reported that more than 17 million barrels of oil passed through the strait on Monday, marking the highest daily flow since the conflict with Iran began disrupting energy shipments.
CNN also reported, citing US officials, that US forces escorted 40 commercial vessels carrying approximately 18 million barrels of oil through the strait on Tuesday. These figures suggested that oil flows through the strategic waterway were approaching levels seen before the conflict, easing immediate concerns over supply shortages. Trump stated Wednesday that the renewed US campaign against Iran would not continue for "too long," while US Vice President JD Vance said Thursday that Washington was not seeking an "indefinite war" with Tehran.
Vance noted that all options remained on the table, including military, economic and diplomatic measures, but emphasized that the US was using different forms of pressure to protect commercial shipping and maintain oil and gas flows through the Strait of Hormuz. Reports that Trump was considering declaring the war with Iran over also provided some relief to markets concerned about the duration and scale of the latest escalation. Additionally, expectations of additional supply from Venezuela provided another factor limiting further price gains.
Trump stated that the US would use Venezuelan oil to replenish its Strategic Petroleum Reserve (SPR), adding that the process would begin soon. The US president previously stated on August 29 that Washington had reached what he described as the "largest oil deal in world history" with Venezuela and had secured control over a large portion of the country's oil reserves. Source: Anadolu Agency (aa.com.tr)
Source: aa.com.tr