Oil prices moved higher on Friday and are on track to post strong weekly gains as concerns grow over crude oil supplies from the Middle East.
The latest increase comes after tensions between the United States and Iran intensified, leading to major disruptions in shipping through the Strait of Hormuz, one of the world’s most important oil transit routes.
Brent crude futures rose 19 cents, or 0.25%, to reach $76.49 per barrel. Meanwhile, U.S. West Texas Intermediate (WTI) crude gained 19 cents, or 0.26%, trading at $72.27 per barrel.
For the week, Brent crude is expected to record a gain of about 6%, while WTI is on course to rise nearly 5%.
According to Vandana Hari, founder of oil market analysis firm Vanda Insights, oil prices have pulled back slightly from the highs seen earlier in the week. However, they remain supported by strong supply concerns as shipping activity through the Strait of Hormuz has almost completely stopped.
Hari noted that the market continues to include a significant risk premium because there is still no clear timeline for when shipping operations in the vital waterway could return to normal.
At the same time, hopes that the United States and Iran could resume diplomatic talks have helped prevent oil prices from rising even faster. Investors believe that a return to negotiations could ease tensions and reduce the risk of further disruptions to global energy supplies.
As a result, the oil market remains caught between ongoing supply fears and expectations that diplomacy could help prevent the crisis from escalating further.
