Oil Prices Rise as Traders Reassess Shipping Flows Through Strait of Hormuz

Oil prices rose over 1% on Friday as traders reassessed shipping flows through the Strait of Hormuz. Brent futures were up $1.01, or 1.13%, at $90.04 a barrel by 1118 GMT, while U.S. West Texas Intermediate (WTI) crude was up $1.18, or 1.41%, to $84.77 a barrel.

Iran's Revolutionary Guards stopped two tankers from transiting the Strait of Hormuz, while four others changed course, according to Fars news. However, two very large crude carriers (VLCC) carrying oil loaded from the Gulf did exit the strait on Friday, although traffic through the waterway remained thin.

Talks between Iran and Oman on managing the Strait of Hormuz continue, despite Iran rejecting Oman's proposal for joint management of the waterway. Geopolitical risks remain high, with a drone strike that sparked fires on two gas vessels in Egypt's Mediterranean port of Damietta raising a new threat to shipping through the Suez Canal.

Brent is on track to rise 23% in July and WTI about 22%, according to analysts. Giovanni Staunovo, a UBS analyst, said 'Iranian media outlets claim that some tankers were forced to turn around, so … still low flows of vessels crossing the Strait has supported prices.'

A drone strike on two gas vessels in Egypt's Mediterranean port of Damietta has raised concerns about shipping through the Suez Canal. Saudi Arabia is seeking to lead a coalition to boost defence cooperation in key waterways, including the Bab el-Mandeb strait.