Hormuz Draft Sparks Oil Price Surge to $83 as Transit Risk Premium Dominates

WTI crude oil prices surged to $77.91 and Brent hit $83.40 after a volatile week, driven by a stricter draft proposal for shipping through the Strait of Hormuz.

The proposed arrangement, which bars US and Israeli vessels from transiting the strait and imposes a 20% cargo-value penalty on violators, has traders pricing in a higher risk premium, pushing prices above $80 per barrel.

Despite the physical supply outlook suggesting prices should be around $70, the transit risk premium is dominating the market, keeping Brent at $83.40, 39.6% below its April peak and 22.7% above its July low.