Oil prices rose sharply, touching $90 per barrel on Friday evening amid rising supply concerns as the Iran war continues.
Brent, the benchmark for two thirds of the world's seaborne oil, was up 5.41 per cent at 5.56pm UAE time to touch $90.04 a barrel. West Texas Intermediate, the gauge tracking US crude, was 8.02 per cent higher at $87.52 a barrel.
Oil prices have been rising since Monday over fears of supply constraints, after Israel and the US attacked Iran last Saturday. Tehran has responded by conducting strikes across the region.
Brent crude futures have risen more than 17 per cent this week, while West Texas Intermediate has jumped 20 per cent.
The oil surge on Friday reversed a drop in prices earlier in the session after the US issued a 30-day waiver to allow Indian refiners to purchase Russian oil. The US Treasury issued a licence late on Thursday that allows Indian companies to buy Russian crude oil and petroleum products loaded on to vessels before March 5. It is valid for one month.
“To enable oil to keep flowing into the global market, the Treasury Department is issuing a temporary 30-day waiver to allow Indian refiners to purchase Russian oil,” US Treasury Secretary Scott Bessent said in a post on X. “This deliberately short-term measure will not provide significant financial benefit to the Russian government as it only authorises transactions involving oil already stranded at sea.”
The stop-gap measure will "alleviate pressure caused by Iran’s attempt to take global energy hostage", he said. "We fully anticipate that New Delhi will ramp up purchases of US oil," he added.
Separately, US officials said they could announce measures to address rising energy prices, potentially including action in the oil futures market.
"Announcements of potential measures from the US government to tame the oil price rally helped pour some cold water on the surge," said Ipek Ozkardeskaya, senior analyst at Swissquote.
The measures include a possible release of strategic oil reserves, loosening fuel-blending requirements or even US Treasury trading oil futures.
While US trading of oil futures could help combat speculation, "many doubt that government selling of oil futures would sustainably cap prices" because the physical market is the ultimate driver, Ms Ozkardeskaya said.
"Benchmarks such as Brent crude and WTI are tied to real supply and demand, so if a conflict in the Middle East disrupts flows for a prolonged period – say weeks or months – especially through chokepoints like the Strait of Hormuz, refiners will still bid up physical barrels regardless of financial selling," she added.
The Strait of Hormuz, through which a fifth of global crude supplies pass, has not been officially closed, but there are no ships sailing through after Iran's Islamic Revolutionary Guard Corps warned vessels to steer clear of the waterway.
The number of crude tankers passing through the strait has plunged by 88 per cent, while the number of vessels carrying liquefied petroleum gas is down 94 per cent, data from analytics company Kpler shows.
Meanwhile, Iranian drones and missiles have hit several Gulf energy sites, including fuel storage tanks in the UAE's Port of Fujairah and fuel tanks at the Omani port of Duqm.
Saudi Arabia's large domestic refinery, Ras Tanura, was struck on Monday, leading to a shutdown. Iran denied attacking the Saudi site on Tuesday. Attacks also led to the shutdown of the world's largest liquefied natural gas plant in Qatar, which meets 20 per cent of the global supply. Operator QatarEnergy said on Tuesday that it was shutting down all petrochemical production.
"Many analysts warn that crude could move towards the $100 per barrel level if the conflict deepens. That is certainly a possibility," Ms Ozkardeskaya said. "But the key question is not only how high prices rise, but how long they stay elevated. The longer energy prices remain high, the tighter global financial conditions become – and the weaker the appetite for risk assets."
