Oil prices experienced an uptick on Friday morning, driven by concerns regarding potential military escalation in the Middle East. This apprehension was fueled by Iran’s release of footage depicting commandos boarding a cargo ship in the Strait of Hormuz, alongside reports indicating that Tehran’s air defenses had engaged “hostile targets”. Brent crude futures increased by $1.23, representing a 1.17% rise, reaching $106.3 per barrel by 0107. Meanwhile, West Texas Intermediate futures saw an uptick of $1.07, or 1.12%, settling at $96.92.
Both benchmark contracts settled up more than 3% on Thursday, rising $5 a barrel following reports of air defenses engaging targets over Tehran and a power struggle between Iran’s hardliners and moderates. U.S. President Donald Trump remarked that Iran might have augmented its arsenal “a little bit” during the two-week ceasefire, yet he asserted that the U.S. military could dismantle it in merely one day. The current ceasefire phase is increasingly being perceived as a preparatory stage for potential conflict, according to a report. If U.S.-Iran negotiations do not achieve significant advancements by the conclusion of April and hostilities recommence, oil prices may surge to unprecedented levels for the year, it noted.
On Thursday, Iran released footage showing commandos in a speedboat boarding a large cargo ship, a development that follows the breakdown of peace negotiations. This incident highlights Iran’s control over the Strait of Hormuz, a critical passageway for approximately 20% of the world’s oil and gas supply. As investors and governments globally seek a lasting resolution, Trump indicated that he would refrain from establishing a “timetable” for concluding the conflict with Iran, expressing his desire to negotiate “a great deal.” He stated “Don’t rush me,” when inquired about the duration he was prepared to wait for a long-term peace agreement with Iran.
Prolonged disruptions in the Strait of Hormuz could lead to global crude and refined-product inventories falling below five-year seasonal lows by late May or early June, thereby reintroducing a supply-risk premium into oil prices, according to Mingyu Gao. Trump announced in a social media post on Thursday that Israel and Lebanon had agreed to extend their ceasefire by three weeks following a high-level meeting between representatives of both countries in the White House Oval Office. Prior to that announcement, Israel issued a warning regarding its preparedness to resume attacks on Iran.