- Oil prices rose on Friday amid concerns over the reopening of the Strait of Hormuz, as Iran, working with Oman, suggested banning vessels deemed hostile and heavily fining violators.
- Brent crude futures rose 99 cents, or 1.2%, to $83.48 a barrel by 0010 GMT, while U.S. West Texas Intermediate futures rose 85 cents, or 1.1%, to $78.84.
- Oil futures settled up on Thursday as Iran reviewed a bill to ban U.S. and Israeli vessels from the Strait of Hormuz, where roughly a fifth of the world’s oil and liquefied natural gas transmitted before the war began at the end of February.
- Prices fell earlier in the week on hopes of a solution, but benchmark Brent breached $80 on Thursday after falling below that for the first time since July 13.
- Tim Waterer, chief market analyst at KCM Trade, noted that markets have seen short-lived arrangements before, so confidence in a new pact fully restoring normal tanker movements remains low, putting a floor under prices.
- An Iranian lawmaker said a parliamentary committee is reviewing a preliminary bill to ban U.S., Israeli, and other hostile vessels from the Strait of Hormuz, with fines up to 20% of cargo value, according to Fars news agency.
- Iran is seeking fees of 5% to 7% of cargo prices from ships using the strait, Oman is discussing around 3%, while Washington wants no fees at all.
- Four industry sources said the proposed deal is not easily workable due to U.S. sanctions and restrictive insurance clauses on any payments.
Oil prices have surged as concerns mount over the Strait of Hormuz, where Iran, in collaboration with Oman, is considering a ban on vessels deemed hostile. This proposal includes fines of up to 20% of cargo value for violators, according to Iranian lawmakers.1
Brent crude futures rose 1.2% to $83.48 a barrel, while U.S. West Texas Intermediate increased 1.1% to $78.84. The rise follows a week of fluctuating prices, with Brent previously dipping below $80 for the first time since July 13, as hopes for a resolution to the ongoing conflict appeared to increase.2
Tim Waterer, chief market analyst at KCM Trade, noted, “Markets have already seen at least one short-lived arrangement earlier this year, so confidence that a new pact would fully restore normal tanker movements remains low.” The proposed ban is part of a broader strategy by Iran to impose fees on vessels using the strait, with estimates ranging from 5% to 7% of cargo prices, while Oman is discussing fees around 3%. In contrast, Washington opposes any fees.57
However, four industry sources have indicated that the proposed deal may face challenges due to U.S. sanctions and restrictive insurance clauses on payments, complicating the enforcement of any new regulations.8
“Brent crude futures rose 99 cents to $83.48 a barrel, while WTI gained 85 cents to $78.84. Iran seeks fees of 5% to 7% of cargo value, Oman around 3%, and Washington none, but U.S. sanctions and insurance clauses complicate the deal.”
