Iran Strait Ban Sends Crude Oil Prices Soaring on Friday

Crude oil futures surged on Friday morning following reports that Iran plans to ban US and Israeli ships from transiting the Strait of Hormuz. The move is likely to tighten global oil supplies and increase prices further.

At 10:02 am, October Brent oil futures rose by 1.72% to $83.91 per barrel, while September WTI crude oil futures increased by 1.49% to $78.44 per barrel. On the Multi Commodity Exchange (MCX), August crude oil futures traded at ₹7488, up 1.50%, and September futures rose by 1.47% to ₹7402.

Warren Patterson, Head of Commodities Strategy of ING Think, and Ewa Manthey, Commodities Strategist, stated in their Commodities Feed that oil prices rallied on Thursday with ICE Brent settling 3.8% higher at $82 a barrel. They attributed the strength to developments over the last 24 hours, which suggest negotiations between the US and Iran are unlikely to proceed smoothly.

Patterson and Manthey noted that Iran wants to ban US and Israeli ships from the Strait of Hormuz, charge service fees for transiting the strait, and seek compensation from hostile countries. They expressed skepticism about a sustainable deal, stating 'there doesn't seem to be much of a compromise'.