Crude Prices Back on the Rise

WTI crude futures rose over 2% toward $98 a barrel on Friday as the blockade of the Strait of Hormuz continues to choke 20% of global daily energy throughput while markets digest the latest escalation in regional hostilities. Defense Secretary Pete Hegseth announced Friday that the United States will launch its largest wave of strikes yet against Iranian targets, an intensification that has effectively halted standard commercial maritime traffic and forced major Gulf producers to curtail output due to storage reaching critical capacity. This persistent supply shock is severely tightening the global energy balance because alternative export routes remain insufficient, compelling international buyers to compete for limited non-Gulf cargoes while shipping costs skyrocket due to elevated war-risk insurance.

WTI crude futures advanced past $96 a barrel on Friday as the functional closure of the Strait of Hormuz and intensifying geopolitical rhetoric outweighed Washington’s latest attempts to stabilize global energy costs. While the US Treasury issued a 30-day license for countries to purchase 100 million barrels of Russian oil currently stranded at sea to stabilize global energy markets, Iran’s new Supreme Leader Mojtaba Khamenei declared the waterway would remain shut. The blockade has removed roughly 20% of global oil trade and forced Gulf producers to cut output by 10 million barrels per day as storage capacity reaches critical limits. Although an Indian tanker successfully transited the strait on Friday, analysts suggest the reprieve is temporary as GPS jamming and the threat of missile strikes continue to disrupt 90% of typical traffic.

WTI crude futures pared early gains to trade below $95 a barrel, taking a breather after a 5% rally this week. Traders continue to assess the conflict with Iran, with no signs of de-escalation, as well as the effectiveness of the US administration’s efforts to cool energy prices. Washington said it would temporarily allow countries to purchase Russian oil currently stranded at sea in an effort to keep a lid on rising energy costs, expanding a temporary waiver granted last week to India. US Treasury Secretary Scott Bessent also called for an international coalition to escort tankers through the Strait of Hormuz “as soon as it is militarily possible”. Earlier in the week, the IEA announced a historic release of 400 million barrels from strategic reserves, though the measure has done little to ease prices. Air strikes in the Middle East continue to disrupt production, while the Strait of Hormuz remains closed.