TLDR
- Brent crude futures advanced 1.1% to $83.43 per barrel while WTI gained 0.8% to $77.91 on Friday
- Iranian lawmakers are considering legislation to prohibit U.S. and Israeli vessels from the Strait of Hormuz
- Tehran’s Revolutionary Guard conducted strikes against what it termed “hostile targets” in the waterway Thursday evening
- A potential Iran-Oman agreement to restore Hormuz shipping may bar American and Israeli vessels
- Market tensions intensified with Houthi strikes on Saudi targets and Ukrainian attacks on Russian energy facilities
Crude oil benchmarks reversed earlier losses Friday following new developments that diminished prospects for a complete restoration of Strait of Hormuz shipping access. Reports of Iranian military operations and advancing restrictions against specific nations’ vessels drove the price recovery.
[[LINK_START_0]]Brent crude futures[[LINK_END_0]] advanced 1.1% to reach $83.43 per barrel. West Texas Intermediate gained 0.8% to settle at $77.91. Despite Friday’s uptick, both contracts remained positioned for weekly declines exceeding 7%.
The week had seen significant price deterioration as markets anticipated an imminent Iran-Oman agreement on shipping access. That optimism produced substantial selloffs in Brent and WTI before Friday’s turnaround.
Market sentiment shifted after Iran’s Islamic Revolutionary Guard Corps confirmed operations against “hostile targets” located near Qeshm Island within the Strait of Hormuz on Thursday night local time, as reported by Iran’s semi-official Fars News Agency.
Tehran Advances Legislation Targeting Western Vessels
Iran’s parliamentary committee has begun evaluating proposed legislation designed to prohibit vessels linked to the United States and Israel from navigating through the Strait of Hormuz. The draft law includes provisions for penalties reaching 20% of cargo valuations for violations.
The potential Iran-Oman arrangement that temporarily buoyed market sentiment reportedly contains stipulations that would exclude Israeli shipping and mandate compensation from nations Tehran categorizes as adversarial.
“Deals to reopen the Strait of Hormuz remain elusive, with investors teetering in the balance,” said Rob Haworth, senior investment strategy director at US Bank Asset Management Group. “For now traffic remains low and the path to a durable deal remains unclear.”
The Strait of Hormuz serves as a transit point for approximately one-fifth of worldwide petroleum and liquefied natural gas volumes. Any sustained limitations on passage through this waterway represent significant concerns for global energy markets.
Additional Supply Disruptions Emerge
Regional hostilities beyond the strait contributed to market unease. Yemen’s Houthi forces, which maintain alignment with Iran, announced operations targeting Saudi military installations and critical infrastructure. These developments heightened concerns regarding Red Sea maritime traffic.
Ukrainian drone operations allegedly ignited a significant Russian refining facility. The incident amplified existing worries about supply chain interruptions affecting the market.
Market participants were also monitoring the U.S. nonfarm payrolls release scheduled for Friday. The employment figures could shape Federal Reserve monetary policy decisions. Elevated interest rates typically dampen economic growth and reduce petroleum consumption.
Notwithstanding Friday’s price appreciation, both Brent and WTI finished substantially below peak levels recorded earlier in the trading week. The weekly declines demonstrate the rapid shift in market psychology following the collapse of expectations for a comprehensive Hormuz reopening agreement.
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