Oil prices were headed early on Friday for a 12% weekly gain, the biggest jump in one week since April, as the re-escalation in the Middle East and the abrupt halt to the recovery of Strait of Hormuz flows pushed crude futures prices to the highest in over a month.
In Asian trade on Friday, both benchmarks were rising by about 1%, as the U.S. military launched a new round of strikes on Iran, for the sixth night in a row.
Brent Crude prices traded 1% higher at $85.06, and WTI Crude, the U.S. benchmark, was up 1.2% at $79.88 per barrel.
Earlier this week, Brent futures topped $86 per barrel as the U.S.-Iran tensions intensified and Iran hit two UAE-managed oil supertankers while transiting the Strait of Hormuz in the southern lane near Oman, in the corridor thought to be controlled by the United States.
The re-escalation saw nightly U.S. strikes on Iran in response to Tehran’s attacks on commercial shipping and the reinstatement of the U.S. naval blockade outside the Strait of Hormuz, in the Gulf of Oman. The blockade aims to deprive Iran of the ability to export its oil.
On Thursday, U.S. forces struck and disabled an Iran-linked sanctioned oil tanker near Iran’s key export terminal, Kharg Island, deep in the Persian Gulf, as the U.S. appears to be broadening the scope of the renewed blockade on Iran.
Early on Friday local time, U.S. forces launched precision munitions that hit dozens of Iranian military targets such as coastal surveillance and air defense sites, military logistics infrastructure, and maritime capabilities, in the sixth consecutive night of strikes, the U.S. Central Command said.
“At the Commander in Chief’s direction, CENTCOM is further degrading Iranian military capabilities and holding Iran accountable for recent attacks on commercial shipping,” the U.S. military said.
The all-but-collapsed ceasefire is halting traffic through the Strait of Hormuz, putting upward pressure on prices as supply from the Middle East dwindles again.
In addition, the Iran-aligned Houthis in Yemen are reportedly waiting for the green light from Iran’s Islamic Revolutionary Guard Corps (IRGC) to close the Bab el-Mandeb Strait and choke the exports via the Red Sea.
By Tsvetana Paraskova for Oilprice.com
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