Oil heads for biggest weekly gain since April as Hormuz crisis deepens

Oil prices are on course early Friday for their strongest weekly performance since April as renewed conflict between the United States and Iran disrupted the recovery of shipping through the Strait of Hormuz and pushed crude prices to their highest levels in more than a month.

In Asian trading, both major benchmarks extended gains for a fourth consecutive session after the US launched another round of military strikes on Iranian targets overnight.

International benchmark Brent crude rose 1 percent to $85.06 per barrel, while US benchmark West Texas Intermediate (WTI) climbed 1.2 percent to $79.88 per barrel.

The gains put crude prices on track for a weekly increase of about 12 per cent, marking the largest one-week advance since April and reversing much of the decline recorded in recent weeks.

Earlier in the week, Brent crude briefly traded above $86 per barrel as tensions between Washington and Tehran intensified following attacks on commercial shipping in the Strait of Hormuz.

Among the incidents were attacks on two UAE-managed oil supertankers transiting the southern shipping lane near Oman, an area widely considered to be within the security corridor monitored by US naval forces.

The renewed escalation has effectively halted what had been a gradual recovery in tanker movements through the Strait following earlier diplomatic efforts aimed at restoring normal trade flows.

Rather, shipping traffic through the waterway has slowed sharply as vessel operators reassess security risks and insurers increase scrutiny of voyages through the region.

The latest round of hostilities has included nightly US military strikes on Iranian targets in response to Tehran’s attacks on commercial shipping, alongside the reinstatement of a US naval blockade in the Gulf of Oman designed to restrict Iranian crude exports.

The blockade represents Washington’s latest effort to limit Iran’s oil export capabilities as relations between both countries continue to deteriorate.

The conflict widened further on Thursday after US forces struck and disabled an Iran-linked sanctioned tanker operating near Kharg Island, Iran’s principal crude export terminal in the Persian Gulf.

The move is being interpreted by market participants as an indication that Washington may be broadening the scope of its enforcement activities beyond the Strait of Hormuz itself.

According to the US Central Command (CENTCOM), American forces launched precision strikes early Friday against dozens of Iranian military installations for the sixth consecutive night.

The targets reportedly included coastal surveillance systems, air defence positions, logistics facilities and maritime infrastructure.

“At the Commander in Chief’s direction, CENTCOM is further degrading Iranian military capabilities and holding Iran accountable for recent attacks on commercial shipping,” the US military said in a statement.

The renewed military activity comes as hopes for a lasting ceasefire between Washington and Tehran continue to fade.

Analysts said the breakdown of negotiations is increasing concerns over crude availability from the Middle East and adding a significant geopolitical premium to oil markets.

The Strait of Hormuz remains the world’s most important oil transit route, handling close to 20 per cent of global oil consumption and a substantial share of global liquefied natural gas exports.

Any prolonged disruption to shipping through the waterway is therefore likely to have immediate implications for global energy markets.

Concerns are also growing over the potential expansion of the crisis to the Bab el-Mandeb Strait, another critical shipping route linking the Red Sea to the Gulf of Aden.

Reports suggest Iran-aligned Houthi forces in Yemen are awaiting instructions from Iran’s Islamic Revolutionary Guard Corps (IRGC) regarding possible actions affecting shipping through the route.

The Bab el-Mandeb has become increasingly important for Saudi crude exports through the Red Sea as producers seek alternatives to the Strait of Hormuz.

Disruptions at both maritime chokepoints would significantly affect global oil trade flows and further tighten supply conditions.

The impact of the latest developments is already becoming visible in oil market fundamentals.

Earlier this week, the Brent futures curve moved sharply into backwardation, with prompt crude contracts trading at a sizeable premium to longer-dated deliveries, signalling expectations of tighter near-term supply.

For oil-exporting countries such as Nigeria, crude prices above $85 per barrel provide support for government revenues, export earnings and foreign exchange inflows, particularly as prices remain well above the Federal Government’s 2026 budget benchmark of $64.85 per barrel.

However, higher oil prices could also increase fuel and transportation costs globally and add inflationary pressure to importing economies if the disruptions persist.

Market attention is now firmly focused on developments around Hormuz and Bab el-Mandeb, with traders closely watching tanker movements and military activity for signs of either further escalation or a return to diplomacy.