Oil prices experienced an increase of over 1% on Friday following the resurgence of hostilities between the U.S. and Iran, which jeopardized a fragile ceasefire and undermined expectations for advancements in the reopening of the Strait of Hormuz, a critical transit route for oil and gas. Brent crude futures increased by $1.41, reflecting a rise of 1.41%, reaching $101.47 per barrel as of 0123. U.S. crude futures for West Texas Intermediate increased by $1.12, or 1.18%, reaching $95.93 a barrel. At the market open, prices had increased by over 3%.
The recent uptick halted a three-day decline, spurred by reports earlier this week indicating that the U.S. and Iran were nearing an agreement to conclude hostilities and facilitate the complete reopening of the Strait of Hormuz, while deferring broader concerns regarding Iran’s nuclear program. For the week, both contracts are poised to decline by approximately 6%. Friday’s increase in prices was prompted by Iran’s allegations that the U.S. breached the month-long ceasefire, while the U.S. contended that its attacks were retaliatory measures in response to Iranian fire on Thursday directed at its navy vessels navigating through the strait. The Iranian military reported that the United States had aimed at an Iranian oil tanker, along with another vessel and civilian regions both in the strait and on the mainland.
In light of the ongoing hostilities, U.S. President Donald Trump informed on Thursday that the ceasefire remains in place. The exchange of fire occurred as Washington anticipated Iran’s reaction to the most recent peace proposal, which failed to tackle several contentious matters, including the U.S. request to reopen the strait, a vital passage for one-fifth of the global oil and gas supply that has remained largely closed since the onset of the conflict, which also involved strikes by Israel, beginning on February 28. According to analyst Tony Sycamore, “On the supply front, the picture remains tight,” while noting that a peace deal remains elusive.
The U.S. Commodity Futures Trading Commission is conducting an investigation into oil price trades amounting to $7 billion, coinciding with significant announcements related to the Iran conflict by President Trump, as reported on Thursday. Most of the trades involved short positions, or bets on prices falling, placed on the Intercontinental Exchange and Chicago Mercantile Exchange prior to Trump’s statements regarding the delay of attacks or the announcement of a ceasefire, which subsequently resulted in a decline in prices.