Oil prices increased on Friday amidst ongoing tensions in the Strait of Hormuz, with the crucial shipping route remaining mostly closed despite a ceasefire agreement between the U.S. and Iran.
U.S. West Texas Intermediate crude futures for May delivery rose 2.2% to $100.04 per barrel at approximately 5:25 a.m. ET, while international benchmark Brent crude futures for June saw a 1.7% increase to $97.59 per barrel.
U.S. President Donald Trump cautioned Iran on Thursday to “cease immediately” if it was imposing charges on tankers crossing the strait, a move that threatens to disrupt a two-week ceasefire accord reliant on reopening the waterway.
Shipping traffic through the chokepoint, which accounted for roughly 20% of global oil supply prior to the conflict, remained substantially limited, keeping the markets anxious.
“Iran is performing extremely poorly, dishonorably some would argue, in allowing Oil to pass through the Strait of Hormuz,” Trump stated in a post on Truth Social.
Trump’s chief economic advisor Kevin Hassett mentioned on Thursday that even getting a single oil tanker across the strait would represent a “significant portion of what is lacking.”
Adrian Beciri, CEO of DUCAT Maritime, a logistics company based in Cyprus specializing in dry bulk, indicated that the Strait of Hormuz remains effectively shut and that the attitudes of shipowners and operators are “precisely the same today” as they were at the height of the conflict.
“To be candid, the situation is incredibly chaotic. There is no known or established means to navigate the Straits of Hormuz. There isn’t even a clear method to reach out to the Iranians on how to proceed, which seems to be the singular approach at this juncture,” Beciri informed CNBC’s “Europe Early Edition” on Friday.
“The scant vessels that do operate are taking different paths than in the past. They are navigating a route closer to Iran’s coastline, and the figures I’m hearing from shipowners off the record are frankly absurd,” he added.
Moreover, assaults on Saudi Arabia’s energy infrastructure have affected its oil production capacity.
These attacks have diminished oil output capacity by about 600,000 barrels per day and reduced flows through the East-West Pipeline by roughly 700,000 bpd, as reported by the Saudi Press Agency, citing a Ministry of Energy source.
Attacks from Iran struck a pumping station along the East-West pipeline, according to a statement from the state news agency. This pipeline carries crude from processing plants near the Persian Gulf to the Red Sea export terminal at Yanbu.
Riyadh has heavily relied on this pipeline as its main export route throughout the conflict, as Iranian assaults have rendered shipments through the Strait of Hormuz increasingly impractical.
In addition, separate attacks on Saudi Arabia’s Manifa and Khurais oil fields have reduced the kingdom’s production by approximately 600,000 barrels per day, as stated by the Saudi Press Agency. Several refineries have also been hit in recent assaults, further exacerbating supply interruptions.
The U.S. established a two-week ceasefire agreement with Iran on Tuesday in exchange for Tehran permitting vessels to navigate the strait. On Thursday, the chief executive of the United Arab Emirates’ state oil firm stated that the waterway continues to be largely closed to shipping.
With Gulf imports falling below 2 million barrels per day and voyage durations extending over several weeks, analysts at Goldman indicated that buyers may have to depend on stockpiles and alternative sources for at least another month, even as escalating fuel prices start to impact demand.
— CNBC’s Justina Lee and Spencer Kimball contributed to this report.
