Brent crude settled at $83.55 a barrel on Friday, up 1.3%, as traders weighed a possible Iran-Oman deal to reopen the Strait of Hormuz against a US naval blockade still redirecting tankers near Iran. Reuters reported the US will lift the blockade once the deal takes hold and shipping resumes "without impediments," but a fee dispute and fresh attacks near the strait keep the timeline uncertain.
Brent crude settled at $83.55 a barrel on Friday, up $1.06 or 1.3%. West Texas Intermediate closed at $78.18, gaining 1.15%. Both benchmarks rose on renewed uncertainty over talks to reopen the Strait of Hormuz, the passage that carried roughly a fifth of the world's oil and liquefied natural gas before war broke out between the US, Israel and Iran in late February.
Blockade lift hinges on Hormuz deal
Even after Friday's gain, Brent still notched a third straight weekly loss, after prices fell earlier in the week when a resolution looked more likely. Oil then pared its settlement-session gains in post-settlement trading after Reuters reported the US will lift its naval blockade on Iran once the Iran-Oman deal is reached and shipping resumes "without impediments."
US Central Command said it has redirected 49 commercial vessels in the waterway since the blockade resumed. Crude oil has stayed highly sensitive to headlines about the terms and timing of a pact that could restore Middle Eastern supply.
Fee dispute keeps the deal out of reach
Iran and Oman are said to have agreed on the route ships would take through the strait, though it remains unclear whether Washington will accept the terms. Iran is seeking fees of 5% to 7% of the price of cargoes using the strait, a senior Iranian official said, while Oman is discussing fees of about 3% and Washington wants none at all. Four industry sources said the proposed deal is not easily workable because of US sanctions and restrictive insurance clauses on payments.
According to Rob Haworth, senior investment strategy director at US Bank Wealth Management: "Deals to reopen the Strait of Hormuz remain elusive, with investors teetering in the balance," he said. He added that traffic through the waterway remains low and the path to a deal is unclear.
Shipping threats widen beyond the strait
Prices rose earlier in the week after Iran attacked "hostile targets" in the strait following explosions near Qeshm Island, according to Fars News Agency. Abu Dhabi National Oil Co. said three of its vessels were attacked while transiting Hormuz this week. Iran-backed Houthis said they carried out a "large-scale" attack against forces loyal to Yemen's Saudi-aligned government, days after claiming a strike on a Saudi tanker in the Gulf of Aden and threatening shipping in the northern Red Sea.
Trump said he thinks the war will end "pretty soon" and that things are "moving along good" on the strait. Analysts said this week's swings signal hostilities between Iran and the US are not yet over. The US Senate also passed a sweeping Russia sanctions bill authorizing tariffs on top buyers of Russian oil and gas, including China and India, and extending sanctions on Iran.
Sources: Investing.com, Rigzone
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