Strait of Hormuz Tensions Send Oil Prices Higher
Oil prices rose on Friday due to concerns over the Strait of Hormuz and potential Iranian bans and fines on vessels it deems hostile or in violation of proposed rules. Brent crude futures were up 0.9% at $83.24 a barrel, while US West Texas Intermediate futures increased by 0.5% to $77.71.
Iran is reviewing a bill to ban US and Israeli vessels from the Strait of Hormuz, through which roughly a fifth of the world's oil and liquefied natural gas normally passes. The country is seeking fees of between 5% and 7% of cargo prices for ships using the strait.
Analysts say that this week's developments signal that hostilities between Iran and the US are not yet over, with Rystad Energy analyst Lin Ye stating: 'That's not the market pricing in a bad deal, it's pricing in confirmation that whatever emerges is a managed/conditional corridor, not a restoration of normal flow.'
Industry sources indicate that a deal on Strait of Hormuz transit is complicated by US sanctions and insurance restrictions on payments.