Brent Jumps $1 Amid Uncertainty Over Resolution of Iran Conflict
admin 
(Investing) – HOUSTON – Crude oil prices rose by over $1 per barrel on Friday due to persistent doubts surrounding ongoing talks to resolve control of and reopen the crucial Strait of Hormuz shipping lane.
Brent crude futures closed up $1.06, or 1.3%, at $83.55 a barrel. West Texas Intermediate (WTI) futures ended at $78.18 a barrel, rising 89 cents, or 1.15%.
Prices had surged by more than $3 a barrel on Thursday as Iran considered legislation to block American and Israeli ships from entering the Strait of Hormuz. Prior to the outbreak of conflict in late February, approximately 20% of global oil and liquefied natural gas shipments passed through this waterway.
Earlier in the week, crude prices dipped on hopes of a potential resolution to the dispute. This volatility has characterized the market since a joint U.S.-Israeli strike in late February sparked the conflict, which has now entered its sixth month. Despite Friday’s gains, Brent ended the week down over 8%, while WTI fell more than 7%.
Vandana Hari, founder of Vanda Insights, noted that while shifting signals regarding a potential agreement have driven market volatility, investors remain uncertain about the specific requirements needed to finalize a deal.
“The market is trying to figure out if an agreement between Iran and Oman would permit U.S.-flagged or U.S.-owned vessels to pass through the Strait of Hormuz, or if ships destined for U.S. ports would be allowed transit,” said Andrew Lipow, president of Lipow Oil Associates.
While Iran and Oman have reportedly reached an understanding on shipping lanes through the strait bordering both nations, it remains uncertain whether Washington will accept the proposed terms.
Market analysts also pointed out that this week’s events indicate that tensions between the U.S. and Iran are far from resolved.
A senior Iranian official stated that Tehran is seeking transit fees of 5% to 7% of cargo values from vessels using the passage. Oman is reportedly proposing fees of around 3%, whereas the U.S. is demanding fee-free transit.
“The longer this supply disruption persists, the more global commercial inventories will continue to deplete,” Lipow added.
Four industry sources indicated that the proposed framework faces significant hurdles due to active U.S. sanctions and restrictive insurance terms on financial transactions.
“The current structure of the Iran-Oman proposal, and the leverage it grants to Tehran, is politically unviable for U.S. President Donald Trump,” said Bjarne Schieldrop, chief commodities analyst at SEB Research. “Trump would face severe domestic political backlash if he accepted it.”
“A full reopening of the strait is absolutely necessary,” said John Kilduff, partner at Again Capital.
Kilduff added that the ongoing ambiguity regarding the resolution and duration of the conflict continues to keep market participants on edge.
