Brent crude rises $1 a barrel amid uncertainty, however, down more than 8% weekly
Brent crude oil rose more than $1 a barrel on Friday amid uncertainty surrounding ongoing negotiations determining control and reopening of the Strait of Hormuz.
Brent crude futures closed at $83.55 a barrel, up $1.06, or 1.3%. WTI crude futures closed at $78.18 a barrel, up 89 cents, or 1.15%.
Oil futures rose more than $3 a barrel on Thursday after Iran reviewed a bill aimed at banning US and Israeli ships from passing through the Strait of Hormuz, which carries about a fifth of the world's oil and liquefied natural gas before the war began in late February.
Oil prices fell earlier in the week as a possible resolution to the six-month-long conflict, which began with a joint US-Israeli attack on Iran in late February, seemed more likely. Brent crude lost more than 8% weekly, while WTI crude fell more than 7%.
This week, signals of a potential deal caused volatility in market sentiment, but the market remains uncertain about what needs to happen for the deal to be finalized.
The discussed Iran-Oman agreement would not allow a US-flagged ship to pass through the Strait of Hormuz. Furthermore, would it allow a ship bound for a US port to pass? These points don't seem very constructive. It's unclear whether the US will accept these conditions.
Analysts also said that this week's developments indicate that hostility between Iran and the US is far from over.
A senior Iranian official stated that Iran will demand a fee of between 5% and 7% of the cargo price from ships using the strait. Oman is negotiating a fee of around 3%, while Washington is not okaying any fee.
The longer the supply disruption lasts, the more the world's commercial reserves will be depleted.
According to sources, the proposed agreement is not easily implementable due to US sanctions and restrictive insurance clauses regarding any payments.
The current structure of the Iran-Oman agreement and the power it gives to Iran is not something Trump can politically accept. If Trump does this, he will face heavy political criticism in his own country.
However, one way or another, the strait needs to be fully reopened, because this is an issue that concerns all countries in the world.
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