Oil rises amid supply disruption fears following Iran's restrictive draft plan for the Strait of Hormuz

Oil prices surged on Friday due to concerns over potential supply disruptions after Iran released a draft plan restricting the Strait of Hormuz. The October Brent crude futures climbed 1.22% to $83.50 per barrel, while September U.S. West Texas Intermediate futures increased by 1.11% to $78.15 per barrel. Westpac, in a statement, noted that rising oil prices reflected the possibility of additional inflationary pressure from energy and the Middle East situation, which would benefit the US dollar and negatively impact government bonds.

Iran's draft plan reportedly proposed banning U.S. and Israeli vessels from passing through the Strait of Hormuz, with payment being a prerequisite for other nations to transit. Although Iran and Oman are reportedly negotiating an agreement to determine transit routes in the Hormuz strait, no formal deal has been reached yet. Inbound traffic would reportedly navigate Iranian waters, while outbound traffic would pass through Omani waters.

The supply worries were compounded by recent events, with Ukraine targeting two of Russia's significant oil refineries—the Yaroslavl/Yanos and Bashneft's Novoil facility—while U.S. imports of Saudi crude halted in July for the first time since 1985. Adding to the speculation, U.S. President Donald Trump told reporters in the Oval Office that he expects the Iran war to conclude "pretty soon."