Oil prices rose on Friday, heading for a weekly gain, as the Iran war kept the Strait of Hormuz effectively shut and Tehran pledged a new framework to oversee the waterway that carries about a fifth of global crude supply.
Brent, the benchmark for two thirds of the world's oil, was trading 1.7 per cent higher at $112.28 a barrel at 1.06pm UAE time. West Texas Intermediate, the gauge that tracks US crude, was up 0.94 per cent at $106.06 per barrel.
“The near-closure of the Strait of Hormuz keeps the oil market tight,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
“Trump downplays rising oil prices, arguing that there is plenty of oil – but blocked in the strait – and that prices will fall like a rock once the issues are resolved. But when will that be? No one knows.”
Shipping traffic on the strait has slowed to a trickle since Washington and Tehran each imposed a blockade on the narrow channel between Oman and Iran.
Energy analytics firm Kpler recorded only 12 westward crossings on Wednesday, mostly carrying general cargo.
Tension between the US and Iran remained high, with supreme leader Ayatollah Mojtaba Khamenei announcing plans to introduce “new management” of the Strait of Hormuz and vowing to counter “hostile” activity in one of the world’s most critical energy transit routes.
A new legal framework will be introduced to govern the strait that could “bring comfort and progress”, and benefit all countries in the region, Mr Khamenei said in a message on Telegram to the Iranian people.
This came after a senior commander in Iran's Islamic Revolutionary Guard Corps warned that even a limited US strike would trigger retaliation across the region.
“We've seen what happened to your regional bases – we will see the same thing happen to your warships,” Aerospace Force Commander Majid Mousavi was quoted as saying by Iranian media.
Oil prices rose to a four-year high of $126 a barrel in early trade on Thursday, last seen in the weeks after Russia's invasion of Ukraine in 2022, after reports of the US considering more military strikes on Iran. The US threatened to use hypersonic missiles in the Middle East. However, oil prices retreated later in the day and remained on an upward trajectory on Friday.
This week, the UAE announced it is leaving the Opec group of which it was a core member, with the decision coming into effect on Friday.
The UAE’s decision to exit Opec reflected a “policy-driven evolution aligned with long-term market fundamentals”, said Suhail Al Mazrouei, UAE Minister of Energy and Infrastructure.
The move will give the world's seventh-largest oil producer more flexibility and responsiveness in managing its oil strategy, Mr Al Mazrouei said, particularly in light of the widespread collapse of energy supply caused by the Iran war.
