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

Crude oil prices surged above $1 per barrel following tanker attacks and the absence of a peace deal between the United States and Iran. Brent futures closed at $88.52 per barrel, up $1.45, or 1.67%, while U.S. West Texas Intermediate crude futures hit $82.40, up $1.15, or 1.42%. Analysts anticipate weekly gains of 6.0% for Brent and 5.4% for West Texas Intermediate.

The attacks on tankers and the lack of progress on a ceasefire agreement are driving the rally heading into the weekend. Andrew Lipow, president of Lipow Oil Associates, warned that if the Hormuz Strait remains restricted, crude oil prices could reach $80 per barrel, causing diesel to reach $180 per barrel and gasoline to reach $130 per barrel, impacting consumers.

On Thursday, the U.S. announced its intention to maintain a naval blockade of Iran and intensify economic pressure on Tehran due to stalled ceasefire talks. U.S. Treasury Secretary Scott Bessent stated that measures previously unseen in the history of economic isolation would be implemented. As the U.S. and Iran disputed control of the strait, shipping traffic through the channel fell below the month's average.

A drone attack on two vessels from the Abu Dhabi National Oil Company in the strait prompted condemnation from the United Arab Emirates, which blamed Iran for the attack. Additionally, Russian crude oil exports from the Shetskari terminal at the Black Sea port of Novorossiysk were suspended following a drone attack, further disrupting one of Russia's key export routes.

Despite the disruptions, OPEC forecasts suggest weaker demand growth, and U.S. crude inventories saw their largest weekly increase in over three and a half years, potentially pulling oil prices lower.