Oil prices rise 1% as Middle East conflict continues Hormuz shipping disruption

Oil prices surged by 1% on Friday amidst heightened uncertainty surrounding the ongoing Middle East conflict and the Strait of Hormuz, according to traders. Brent crude climbed to $83.33 per barrel, while US West Texas Intermediate (WTI) crude rose to $77.98. This movement marked a reversal from earlier this week when prices had dipped as expectations swelled that the conflict might be nearing a resolution.

Trump, in a recent Oval Office address, expressed his belief that the conflict involving Iran would soon come to an end, citing Iran's potential inability to continue fighting. Simultaneously, Iran and Oman engaged in discussions regarding new transit proposals, while Tehran continued to target vessels deemed hostile.

The latest spike in oil prices comes amid concerns over proposals to restrict shipping through the Strait of Hormuz. Iran, in collaboration with Oman, suggested barring hostile vessels from the waterway and imposing significant penalties on those found breaching the proposed rules. Iran's lawmakers have also introduced a preliminary bill that could prohibit US, Israeli, and other hostile vessels from transiting the strait, with potential fines reaching up to 20% of the cargo value.

Tehran is also proposing transit fees of 5-7% of cargo value, while Oman and Washington have suggested charges of around 3%.

However, implementing such an arrangement remains challenging due to US sanctions and insurance restrictions affecting payments. Despite these proposals, industry sources remain skeptical about the pact fully restoring normal tanker movements. Meanwhile, Yemen's Houthis claimed to have carried out missile and drone attacks on Saudi deployments in Marib and Hadramout on Thursday.