Oil Prices Rise on Strait of Hormuz Uncertainty
Oil prices rose on Friday due to uncertainty over ongoing negotiations involving the control and reopening of the Strait of Hormuz, a crucial shipping artery. Brent crude futures settled at $83.55 a barrel, gaining $1.06 or 1.3 percent, while West Texas Intermediate futures finished at $78.18 a barrel, up 89 cents or 1.15 percent.
The increase follows oil prices falling earlier in the week as a possible solution to the conflict looked more likely, but uncertainty remains about what needs to happen for an agreement to be clinched.
Vandana Hari of Vanda Insights said the market is trying to assess if an Iran-Oman agreement would allow a US-flagged vessel to transit the Strait of Hormuz, while Andrew Lipow of Lipow Oil Associates questioned whether it would permit a US-owned vessel or one headed for a US port.
The Strait of Hormuz lies between Iran and Oman, with both countries agreeing on the route ships would take through the strait. However, it is unclear if the US will agree to these terms.