Crude futures climbed 12 per cent on Friday due to disruptions to global oil supplies because of the expanding US-Israel war with Iran.
During the session, Brent crude futures settled at $92.69 a barrel after gaining $7.28 or 8.52 per cent, and the US West Texas Intermediate (WTI) crude futures finished at $90.90 a barrel, up $9.89 or 12.21 per cent.
In one week, WTI rose 35.63 per cent, and Brent climbed 27 per cent, the biggest weekly gains since the COVID-19 pandemic in 2020.
Disruptions to the Middle East supply and tanker traffic through the Strait of Hormuz continue to rattle global energy markets.
The strait is a narrow waterway which handles roughly a fifth of the world’s traded crude, making it one of the most critical chokepoints in the global oil system. Even partial disruptions or perceived risks to tanker traffic can trigger rapid price moves as traders scramble to price in supply uncertainty.
With the Strait now effectively closed for seven days, that means about 140 million barrels of oil have been unable to reach the market. Vessel traffic has effectively dropped from an average of 138 ships a day to around 1 or 2.
The conflict has spread across the Middle East’s key energy-producing areas, disrupting output and forcing shutdowns of refineries and liquefied natural gas plants.
Qatar’s energy minister told the Financial Times he expects all Gulf energy producers to shut down exports within weeks, a move he said could drive oil to $150 a barrel. Kuwait is also discussing cutting production even further, and refining operations as well, to levels that would match what would be needed domestically.
US President Donald Trump, in an interview, said he was not concerned about rising petrol prices linked to the conflict after he said the US government would step in to provide insurance coverage have yet to have an effect.
President Trump also said the US Navy would escort tankers in the strait earlier this week, but soon after, took it back, after the Navy itself said there was “no chance” of such escorts.