Oil extended its weekly gains after Iran, working with Oman, proposed banning vessels deemed hostile from the Strait of Hormuz and fining violators up to 20% of cargo value. Both Brent and WTI were still headed for a weekly loss of about 8% despite the latest gains.
Oil extended its gains on Friday after Iran, working with Oman, suggested banning vessels deemed hostile from the Strait of Hormuz and heavily fining those that violate the proposed rules. Brent crude futures rose 85 cents, or 1.03%, to $83.34 a barrel by 0634 GMT. U.S. West Texas Intermediate futures added 52 cents, or 0.67%, to $77.81.
A volatile week for both benchmarks
Futures had settled up more than $3 a barrel on Thursday as Iran reviewed a bill to ban U.S. and Israeli vessels from the strait, a corridor that normally carried roughly a fifth of the world's oil and liquefied natural gas before the war began at the end of February. Prices had fallen earlier in the week as a resolution to the conflict looked more likely, but Brent breached $80 on Thursday after dropping below that level for the first time since July 13, and both benchmarks were still headed for a weekly loss of about 8%. Analysts said this week's events signalled that hostilities between Iran and the U.S. are not yet over.
Iran and Oman float rival tanker fees
An Iranian lawmaker said a parliamentary committee is reviewing a preliminary bill that would ban U.S., Israeli and other vessels deemed hostile from the strait and fine violators up to 20% of cargo value, according to the Fars news agency. Iran is seeking fees of between 5% and 7% of the price of cargoes using the strait, while Oman is discussing fees of around 3% and Washington wants none at all. Lin Ye, vice president of commodities market oil at Rystad Energy, said oil prices are reacting to Iran's published draft plan for Hormuz transit conditions.
According to Vandana Hari, founder of Vanda Insights, this week's signals on a potential deal "have driven a roller-coaster ride in market sentiment". She added that the market remains uncertain about what needs to happen for an agreement to be clinched. Four industry sources said the proposed fee arrangement is not easily workable because of U.S. sanctions and restrictive insurance clauses on payments.
President Trump told reporters on Thursday that he believed the war would be over soon. Yemen's Houthis, meanwhile, said they carried out missile and drone attacks on Saudi deployments in Marib and Hadramout on Thursday.
Source: Reuters
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