Oil surged Thursday: Brent crude climbed as much as 4.7% to $83.19 a barrel after a report of an Iran-Oman framework for managing shipping through the Strait of Hormuz, then extended gains on reports that Iran struck targets inside the waterway. West Texas Intermediate rose 3.7% to $77.96 a barrel intraday before both benchmarks settled off their highs. A surprise build in U.S. crude inventories pointed to softer near-term demand even as a geopolitical premium stayed embedded in prices.
Brent crude climbed 4.7% to $83.19 a barrel on Thursday, touching a session high of $83.47, after a media report said Iran and Oman had reached a framework agreement on managing shipping through the Strait of Hormuz. The gains accelerated after separate reports that Iran had struck targets inside the strait. West Texas Intermediate added 3.7% to $77.96 a barrel, touching a session high of $78.30, though both benchmarks were still on track for steep weekly losses.
That rally carried into the settlement: WTI closed at $77.29, up $2.07 or 2.75%, while Brent settled at $82.49, up $3.04 or 3.83%, according to InvestingLive. Brent outperformed WTI, as traders priced in a larger risk premium tied to Persian Gulf supply risk.
An Iran-Oman framework for the strait
Iran and Oman have been negotiating a framework for managing the strait, which carried a fifth of the world's oil and gas before the Middle East conflict began in late February. Iran's Fars News said the initial text was under review by authorities, citing parliament member Alireza Salimi, and that passage of U.S., Israeli, and other hostile vessels would be prohibited until compensation was paid.
Reported strikes and a wary Trump
Fars News later reported that Iran had struck hostile targets in the Strait of Hormuz, and Tasnim News said two explosions heard on Qeshm Island were tied to the action near the chokepoint's entrance. Trump said this week he had called off a planned attack on Iran due to progress toward a deal. Asked what made him think Tehran would hold up its end this time, Trump gave an uncertain answer: "It may be, it may not be."
A surprise crude inventory build
Not all the data backed the rally: U.S. crude oil inventories unexpectedly rose about 2.5 million barrels last week, compared with expectations for a 1.5 million barrel drawdown, suggesting softer near-term demand. Gasoline stockpiles fell 1.64 million barrels and distillate stockpiles fell 3.47 million barrels over the same week.
Roughly 20% of global oil consumption passes through the Strait of Hormuz. There was no confirmed disruption to oil flows, InvestingLive said.
Sources: Investing.com, InvestingLive
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