Oil climbs over US$1 on tanker attacks, no progress on peace

Oil futures surged past US$1 per barrel on Friday (Aug 14) due to attacks on tankers and a lack of progress on a peace deal between the Trump administration and Iran. Brent futures rose to US$88.52 a barrel, while US West Texas Intermediate (WTI) crude futures increased to US$82.40. Brent and WTI were poised for weekly gains of 6% and 5.4%, respectively.

Andrew Lipow, president of Lipow Oil Associates, noted that the rally would continue into the weekend following the recent attacks and the failure to reach an agreement on a ceasefire. A "day of reckoning" could arise if the Strait of Hormuz, which carries 20% of global oil shipments, remains restricted. US Treasury Secretary Scott Bessent stated that the US was prepared to maintain a naval blockade of Iran indefinitely and impose further economic pressure on Tehran.

As the US and Iran disagreed over control of the strait, shipping traffic through the channel fell below the monthly average. On Thursday, state-owned Abu Dhabi National Oil Company vessels were attacked in the strait, with the UAE government accusing Iran of the incident. Russian oil exports from the Black Sea port of Novorossiysk were halted after a drone attack, further disrupting global oil supplies.

Despite these challenges, Opec forecasts indicated weaker demand growth, and US crude inventories experienced their biggest weekly increase in over 3.5 years, leading to concerns about a potential price drop.