Oil markets are closing the week with a persistent risk premium as ongoing disruptions in the Strait of Hormuz keep supply concerns front and center. Brent crude traded near $76 a barrel on Friday, while West Texas Intermediate hovered around $72, with both benchmarks set for strong weekly gains—Brent up approximately 6% and WTI roughly 5%.
Hormuz Disruptions Keep Supply Fears Alive
The rally follows a fresh escalation between Washington and Tehran, with Iranian forces targeting US-linked infrastructure in Gulf states after US strikes on Iran's southern coastal and eastern provinces. Local media reported explosions across southern Iran, including near Bushehr, home to one of the country's nuclear facilities. The immediate concern for oil traders is not just the fighting itself but its impact on shipping. Tanker traffic through the Strait of Hormuz has slowed to a near-standstill as owners reassess security and insurance risks. The strait carried about one-fifth of global oil and LNG flows before the war, making any prolonged disruption a direct threat to supply.
Diplomacy Limits the Upside
Even with the elevated risk premium, crude has not returned to the panic levels seen earlier in the conflict. Market analysts note that traders still expect Washington and Tehran to maintain some diplomatic path, particularly as both sides have an interest in avoiding a full closure of Hormuz. President Donald Trump tempered the rally by stating he did not expect the war to restart in full and that any fresh fighting would be resolved quickly. That reassurance has kept buyers from chasing crude too aggressively, even as physical flows remain constrained. ANZ commodity strategists point to another reason for restraint: US strikes have focused on military targets rather than Iranian energy infrastructure. As long as oil fields, export terminals, and refineries are spared, the market may price disruption risk without assuming a full supply shock.
Weekly Gain Still Looks Fragile
The balance remains delicate. Any further attacks on tankers, ports, or Gulf energy assets could send crude sharply higher. However, if shipping flows improve or talks resume, some of this week's risk premium could unwind quickly. That leaves oil in a headline-driven range. Supply fears are supporting prices, but confidence in eventual diplomacy is preventing a more disorderly rally. The next move will depend less on inventories and more on whether Hormuz can reopen safely. For context, silver has held near $58 as similar Hormuz oil risk and Fed rate uncertainty weigh on markets, while gold slipped as the Iran oil spike fueled Fed rate fears, overwhelming its haven appeal.
This article is for informational purposes only and does not constitute financial advice.
