Oil prices rose by over $1 on attacks on ships and a lack of progress in peace talks
Ship traffic in the Strait of Hormuz was restricted due to hostile claims between the US and Iran. Crude oil futures rose by over $1 a barrel on Friday due to tanker attacks and a lack of progress in a peace deal between the Trump administration and Iranian leadership.
Brent futures closed up $1.45, or 1.67%, at $88.52 a barrel. WTI crude futures closed up $1.15, or 1.42%, at $82.40.
Brent and WTI have posted weekly gains of approximately 6.0% and 5.4%, respectively.
A surge towards the end of the week followed new tanker attacks and a lack of progress in a ceasefire agreement.
We may not feel the devastating effects of restricted traffic in the Strait of Hormuz, through which 20% of global supply passes, deeply in the short term; crude oil prices may be $80 a barrel, but diesel prices have climbed to $180 a barrel and gasoline to $130 a barrel.
On Thursday, the U.S. said it could extend its naval blockade of Iran indefinitely and increase economic pressure on Tehran in response to the deadlock in ceasefire talks. Official sources claimed that the measures against Iran would be unprecedented in the history of economic isolation of a country.
As the U.S. and Iran vied for control of the strait, ship traffic through the strait fell below the monthly average.
According to three sources familiar with the matter, crude oil exports from the Sheshkaris terminal in the Russian Black Sea port of Novorossiysk were suspended on Friday following a drone attack, adding to disruptions at one of the country's key export hubs.
The attack on the Novorossiysk port also affected global prices and supply.
While Middle Eastern supplies are constrained, OPEC forecasts pointed to weaker demand growth and U.S. crude inventories posted their largest weekly increase in more than 3-1/2 years.
Reports this week from the International Energy Agency (IEA) and the US Energy Information Administration (EIA) were quite illuminating. Storage capacity is in much better shape than feared, which could pull oil prices down.
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