Oil climbs over $1 on tanker attacks, no progrees on peace

Crude oil prices surged over $1 a barrel on Friday, amid tanker attacks and a lack of progress towards a peace accord between the United States and Iran. Brent futures settled at $88.52 a barrel, up $1.45, or 1.67%, while U.S. West Texas Intermediate crude futures finished at $82.40, up $1.15, or 1.42%. These gains set the stage for weekly increases of 6.0% and 5.4%, respectively.

Andrew Lipow, president of Lipow Oil Associates, noted that the rally was driven by new attacks on tankers and the absence of a ceasefire agreement. He warned that a "day of reckoning" could arise if traffic in the Strait of Hormuz remained restricted, with 20% of global oil supplies passing through the channel.

U.S. officials have declared an indefinite naval blockade on Iran and are considering further economic measures in response to stalled ceasefire talks. Treasury Secretary Scott Bessent announced that the U.S. would apply unprecedented economic isolation measures against Tehran.

Shipping traffic through the Strait of Hormuz fell below the month's average due to claims over control by the U.S. and Iran. On Thursday, two vessels from Abu Dhabi National Oil Company were attacked while passing through the Strait, an incident condemned by the UAE government as an Iranian attack.

The tanker attacks and the lack of a peace agreement have contributed to a surge in crude oil prices, with implications for consumer prices, as diesel and gasoline costs are also rising. OPEC forecasts indicate weaker demand growth, and U.S. crude inventories have seen their largest weekly increase in over three and a half years, which may help ease prices in the long term.