US Jobs Data and Strait of Hormuz Uncertainty Fuel Oil Price Volatility
Oil prices surged on Friday as weaker US employment data and renewed uncertainty around Iran-US talks fueled market volatility. Brent crude futures rose by $0.84, or 1.02%, to $83.33 a barrel at 10:28 a.m. CDT (1528 GMT), while West Texas Intermediate (WTI) gained $0.89, or 1.15%, to $78.18.
The market had dropped sharply earlier in the week as hopes for an agreement between Iran and the US increased. Despite Friday's gains, both benchmarks were heading for weekly declines of more than 9%.
US government data showed the economy lost 23,000 jobs in July. Phil Flynn, senior analyst at Price Futures Group, said the jobs report was the key driver for Friday's market, as weaker employment could reduce the likelihood of further Federal Reserve interest rate increases. Higher interest rates can weaken fuel demand by reducing consumers' purchasing power.
Meanwhile, developments surrounding the Strait of Hormuz continued to inject uncertainty into the oil market. Iran is seeking fees of 5% to 7% of cargo values from ships using the waterway, while Oman is considering charges of around 3%. Washington wants the passage to remain free of fees.