Oil Holds Gains on Iran Rhetoric

WTI crude futures traded around $95 per barrel on Friday after a sharp two-day rally, as Iran’s new Supreme Leader Mojtaba Khamenei pledged to keep the Strait of Hormuz effectively shut. He also warned that Iran may open additional fronts in the conflict if the US and Israel continue their attacks, while US President Donald Trump said preventing Iran from obtaining nuclear weapons and posing a threat to the Middle East is more important to him than the cost of oil. Tankers have been unable to load cargo from the Gulf since the conflict began earlier this month, effectively removing 20% of global trade and forcing GCC members to cut production by 10 million barrels per day as storage capacity filled up. The IEA said the disruption was the largest in oil market history, prompting its members to agree on a 400 million barrel release from strategic stockpiles.

WTI oil futures surged further to test the $97 per barrel mark on Thursday on risks that seaborne oil supply from the Persian Gulf is likely to remain halted for longer. The new Iranian Supreme Leader Mojtaba Khamenei stated that the Strait of Hormuz should stay closed in his first public statement, maintaining Tehran's defiant rhetoric and extending bets on the duration of supply disruptions after multiple tankers near the chokepoint were hit the IRGC overnight. The statement coincided with strikes of increasing intensity between Iran, Israel, and GCC members. Tankers have been unable to take deliveries from the Gulf since the start of the conflict this month, effectively removing 20% of global trade and driving GCC members to cut production by 10 million barrels per day as storage capacity was reached. The IEA stated that the disruption was the largest in the oil market in history, driving its members to agree on a 400 million barrel release of strategic stockpiles.

WTI crude futures topped $95 per barrel on Thursday, before trimming gains, marking a 2nd consecutive session of increases as persistent concerns over the Iran war overshadowed a coordinated release of oil reserves by major economies. In the latest developments, Iraq halted operations at its oil terminals after two oil tankers were targeted in Iraqi waters, underscoring heightened supply risks in the Middle East. Iran also told intermediaries that the US must guarantee that neither it nor Israel will strike the country in the future for a ceasefire to be considered, which Washington is unlikely to accept. Additionally, the Strait of Hormuz also remains effectively shut, with several commercial vessels reportedly struck off the coast of Iran. That has prompted major Middle Eastern producers to significantly curb output, tightening global supply further. Meanwhile, the IEA approved its largest-ever release of emergency oil reserves, with member states set to release 400 million barrels.