Brent crude rose 0.9% to $83.24 a barrel and WTI gained 0.5% to $77.71 on Friday as Iran's proposed rules for reopening the Strait of Hormuz kept traders on edge. Saudi Arabia is also bracing for a possible coordinated attack from Iran-aligned forces in Iraq and Yemen, opening a second front of supply risk. Investors are now awaiting U.S. payrolls data that could shape the Federal Reserve's thinking on interest rates.
Brent crude futures were up 75 cents, or 0.9%, at $83.24 a barrel by 0815 GMT on Friday, while U.S. West Texas Intermediate futures rose 42 cents, or 0.5%, to $77.71.
Iran's Hormuz plan renews market unease
Oil futures had settled more than $3 a barrel higher on Thursday after Iran reviewed a bill to ban U.S. and Israeli vessels from the strait, the 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. But prices had fallen earlier in the week as a resolution looked more likely, leaving both benchmarks on course for a weekly loss of about 8% before Thursday's rebound.
Meanwhile, Iran is seeking fees of between 5% and 7% of the price of cargoes from ships 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 arrangement is not easily workable because of U.S. sanctions and restrictive insurance clauses on payments.
Rystad Energy analyst Lin Ye said the price reaction reflects confirmation that any outcome will be "a managed/conditional corridor, not a restoration of normal flow," rather than a bad deal. Vandana Hari, founder of Vanda Insights, said the market remains in the dark on what would be needed to clinch an agreement.
Saudi Arabia braces for a second front
A Saudi official source told The Guardian that the kingdom expects an imminent, coordinated attack from Iran's proxies in Iraq and the Houthis in Yemen, which could target civilian energy infrastructure, ports and airports. A Yemeni source told the same outlet that Saudi Arabia is preparing wide-scale military action against the Houthis that could include land and sea operations.
The Houthis said they carried out missile and drone attacks on Saudi deployments in Marib and Hadramout on Thursday. The risk is amplified because Saudi Arabia's oil exports via the Red Sea now account for 50% of shipments, after the Strait of Hormuz handled 80% of exports before the war. In 2019, Houthi strikes on Aramco facilities wiped out half of the kingdom's crude production.
Fed data adds to the uncertainty
President Trump told reporters on Thursday that he believed the war would be over soon. However, analysts said this week's developments show hostilities between Iran and the U.S. are not yet over.
Meanwhile, investors are awaiting U.S. payrolls data later on Friday, which could offer a steer on the Federal Reserve's thinking on interest rates, with higher rates seen as a drag on economic growth and oil demand.
Sources: Investing.com, Investing.com
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