Hormuz Tensions Lift Oil Prices Despite Weaker Demand Expectations

Oil prices rebounded slightly on Friday due to concerns over global crude supplies, specifically from the Strait of Hormuz. The area has been a major source of worry for oil markets after Iran restricted traffic through the waterway and the US warned it would keep naval blockades in place as long as necessary.

The tensions have added uncertainty to oil flows from the region, which previously handled around one-fifth of global supplies. Brent crude futures gained 9 cents, or 0.1%, to $87.16 a barrel, while US West Texas Intermediate rose 4 cents to $81.29 a barrel.

However, gains were capped by weaker demand expectations. Both OPEC and the International Energy Agency have recently lowered their forecasts for global oil demand growth. Additionally, US government data showed that crude inventories recorded their biggest weekly increase in over three years, capping price increases.