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Energy Supply · Geopolitics · Oil Prices · Strait Of Hormuz
Oil prices gained on Friday, with Brent futures rising $1.67, or 1.5%, to $110.32 a barrel and U.S. West Texas Intermediate (WTI) crude adding 33 cents, or 0.3%, to $96.47, despite concerted efforts by the US and its allies to boost supply and secure the critical Strait of Hormuz amid escalating Middle East geopolitical tensions.
Geopolitical tensions, including fresh attacks between Israel and Iran and a hit on an oil refinery in Kuwait, fueled the price increases. Iran's response to an Israeli attack on a major gas field resulted in a 17% knockout of Qatar’s LNG capacity, with repairs estimated to take up to five years.
Ole Hansen, head of commodity strategy at Saxo Bank, stated that a quick reversal in energy prices is unlikely due to production damage and a tight market. European nations Britain, France, Germany, Italy, the Netherlands, Japan, and Canada committed to ensuring safe passage through the Strait of Hormuz, which handles 20% of global oil and LNG transit.
U.S. Treasury Secretary Scott Bessent outlined potential moves to remove sanctions from Iranian oil and release crude from the U.S. Strategic Petroleum Reserve. North Dakota's crude output is expected to increase as operators restart inactive wells and winter restrictions ease, though the pace depends on sustained high oil prices.
Priyanka Sachdeva, senior market analyst at Phillip Nova, emphasized that inflicted damage and logistical challenges mean full recovery will take a long time, keeping markets sensitive to the Hormuz chokepoint.
Gold prices climbed as diplomatic efforts to end the Middle East war and a drop in oil prices eased concerns over inflation.
