Oil prices have surged to their highest weekly increase since April, yet analysts caution that Brent crude would require a sustained disruption in the Strait of Hormuz or more evident signs of global supply constraints to surpass the $90 per barrel mark. On Friday, Brent crude hovered around $85 after an 11% rise over the week, while West Texas Intermediate, the U.S. benchmark, neared $80. The price hike comes amid heightened tensions between the U.S. and Iran, which have impacted supply routes in the Middle East and slowed tanker traffic through the crucial Strait of Hormuz.
Despite the rising regional tensions, Brent crude has struggled to exceed this week’s peak of $87.55 per barrel. Market analysts suggest that traders are still banking on diplomatic efforts to avert a prolonged crisis. The Strait of Hormuz remains a focal point of concern for energy markets since it is a passageway for approximately 20% of the world’s oil supply. Shipping companies are keeping a close eye on the security situation as tanker movements have decreased.
The ripple effect of these developments is already being felt in fuel markets. In the U.S., refining margins have increased as supplies of diesel and gasoline have tightened, while European fuel markets are also experiencing mounting pressure. Additional concerns arise from disruptions in Russian exports, adding to the global supply worries.
Experts indicate that oil prices may not break through the $90 barrier unless there is a notable decline in inventories or if the tensions between Washington and Tehran intensify, causing prolonged interruptions in shipping through the Strait of Hormuz. For the time being, traders are closely watching diplomatic actions and supply data, which will play a crucial role in determining the next significant movement in global oil markets.