Oil Prices Rise 8% as US-Iran Tensions Heighten Energy Risk
Oil prices end the week higher on Friday as renewed military tensions between the US and Iran and persistent security risks in the Strait of Hormuz revived concerns over disruptions to global energy supplies.
International benchmark Brent crude futures for November delivery traded at $94.77 per barrel on Friday, up 7.6% 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.
Oil prices are primarily supported by a renewed escalation in hostilities between Washington and Tehran, which increased uncertainty over the security of energy shipments through the Strait of Hormuz, one of the world’s most important oil transit routes.
Tensions intensified over the weekend after US forces struck targets on Iran’s Larak Island near the Strait of Hormuz. Iran retaliated with missile and drone attacks against sites used by US forces across the region.
The escalation continued during 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) said 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 also remained elevated.
The UK Maritime Trade Operations (UKMTO) reported Tuesday that a tanker had been struck by three unknown projectiles while exiting the Strait of Hormuz off Oman.
Iran also said during the week that it had laid additional naval mines in the strait and reported that oil tankers attempting to pass through what Tehran described as unauthorized routes had struck mines.
The developments raised concerns that even if oil shipments continue through the waterway, heightened security risks could disrupt tanker movements, raise insurance and freight costs and discourage some operators from using the route.
Before the conflict, around 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 to those flows added a geopolitical risk premium to crude prices, pushing Brent above $95 per barrel during the week.
However, reports of a sharp recovery in oil flows through the Strait of Hormuz and signals from Washington that it does not seek a prolonged conflict with Iran limited further price gains.
– Rising Hormuz flows, US signals limit gains
US President Donald Trump said 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 said 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 about 18 million barrels of oil through the strait on Tuesday.
The figures suggested that oil flows through the strategic waterway were approaching pre-conflict levels, easing concerns about an immediate supply shortage.
Expectations that the latest round of fighting may not develop into a prolonged military campaign also capped upward pressure on prices.
Trump said 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 said all options remained on the table, including military, economic and diplomatic measures, but stressed 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 war on Iran also offered some relief to markets concerned about the duration of the latest escalation. Meanwhile, expectations of additional supply from Venezuela provided another factor limiting gains.
Trump said the US would use Venezuelan oil to replenish its Strategic Petroleum Reserve (SPR), adding that the process would begin soon.
The US president said on Aug. 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. Crude Oil Prices Decline as Trump Plans to End Iran War
