Crude Oil Prices Rise for Second Day as Strait of Hormuz Tensions Return; Brent Above $83 | Commodity Markets Today
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The oil market is once again pricing in the risk of prolonged disruption around the Strait of Hormuz after Iran proposed restrictions on vessels using the key waterway. The move has pushed Brent back above $83 a barrel, while traders are also watching US-Iran diplomacy and the possibility of further attacks on regional energy infrastructure.
Crude oil prices extended gains for a second straight session on Friday as fresh concerns over the Strait of Hormuz outweighed earlier hopes of a diplomatic breakthrough between the United States and Iran.
At around 9:00 am, Brent crude futures were trading 1.2% higher at $83.48 a barrel, while US West Texas Intermediate (WTI) crude futures rose 1.1% to $78.84 a barrel.
Brent had gained more than $3 a barrel on Thursday after reports that Iran was considering restrictions on vessels passing through the Strait of Hormuz.
Why Are Crude Oil Prices Rising Today?
The latest move higher came after Iran, in coordination with Oman, proposed restrictions on vessels it considers hostile from passing through the Strait of Hormuz.
According to Iran's Fars news agency, an Iranian parliamentary committee is examining a draft bill that would prohibit US, Israeli and other vessels classified as hostile from using the waterway. The proposal also includes penalties of up to 20% of a cargo's value for vessels that breach the restrictions.
The Strait of Hormuz is a major route for global energy supplies and handled nearly one-fifth of global oil and liquefied natural gas trade before the conflict began at the end of February.
Iran is also seeking transit fees of around 5% to 7% of cargo value from vessels using the strait, while Oman is discussing a fee of about 3%. The US, however, is pushing for unrestricted passage without transit charges.
Industry sources cited by Reuters said implementing such an arrangement could prove difficult because of existing US sanctions and insurance restrictions on payments.
US-Iran Talks Remain in Focus
Crude oil prices had fallen earlier this week as hopes of a diplomatic solution to the US-Iran conflict increased.
That optimism has weakened after the latest developments around the Strait of Hormuz.
US President Donald Trump said on Thursday that he believed the war would end soon. However, uncertainty over the proposed shipping arrangements has kept traders cautious about how quickly normal crude flows can return.
Any further restrictions on vessels using the strait could raise concerns over the movement of oil from the Persian Gulf and add a geopolitical premium to crude prices.
The risk of further disruption to Middle East shipping is also keeping oil traders on alert.
Yemen's Iran-backed Houthi rebels said they launched missile and drone attacks on Saudi deployments in Marib and Hadramout on Thursday.
The attacks add another layer of uncertainty for shipping routes in the region. Investors are watching whether the renewed tensions spread to oil infrastructure or commercial vessels, which could put additional pressure on global crude supplies.
Oil Market Awaits Fresh Direction
The near-term direction of crude oil prices will largely depend on developments around the Strait of Hormuz and the progress of US-Iran negotiations.
The market had started pricing in the possibility of a diplomatic resolution earlier this week, but the latest proposal from Iran has brought supply concerns back into focus.
If shipping through the strait remains restricted, crude prices could stay volatile as traders assess the impact on global supplies. On the other hand, a clear agreement that allows normal commercial traffic to resume could take some of the geopolitical premium out of oil prices.
Investors will also track US economic data and signs of changes in fuel demand, while any fresh attacks on energy infrastructure could trigger another sharp move in crude.
MCX Crude Oil Technical Outlook
According to Kotak Neo Commodity Research, MCX Crude Oil (August) is expected to maintain a sideways-to-bearish bias, with the recent technical setup pointing to a broad trading range. The latest available Kotak Commodity Insight had placed MCX crude in a ₹6,850-₹7,340 range.
The technical view remains important as crude prices respond sharply to changes in geopolitical expectations. A sustained move above the upper end of the range could indicate a shift in the short-term trend, while renewed weakness could bring the lower end of the range back into focus.
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This article is for informational purposes only and should not be considered investment advice from Kotak Neo. For compliance T&C and disclaimers, visit www.kotakneo.com/disclaimer
Rochelle Britto is a business journalist with 8+ years of experience in financial journalism. She covers equity markets, corporate earnings, IPOs, commodities and the economy.
As a reporter with leading business publications, she has tracked financial markets and covered sectors including banking and financial services, retail, consumer goods, advertising and e-commerce.
Outside work, she enjoys travelling, discovering local cultures and spending time in nature.
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