Oil Rises, Military Escalation in Hormuz Raises Supply Risk Premium
Oil prices rose on Friday (April 24th) amid growing concerns about a new military escalation in the Middle East, after Iran released footage of commandos boarding a cargo ship in the Strait of Hormuz and reports emerged that Tehran's air defenses were engaging "hostile targets." These developments have again highlighted shipping security risks in the most crucial energy route for global markets.
In morning trading, Brent rose 99 cents, or 0.94%, to $106.06 per barrel, while WTI rose 71 cents, or 0.73%, to $96.56. For the week, Brent gained about 17.13% and WTI gained 15.13%, marking one of the largest weekly gains since the war began.
Disruptions in the Strait of Hormuz are significant because the waterway typically carries about 20% of the world's oil and LNG supplies. The closure of the strait following the outbreak of the US-Israel war against Iran tightened supply, so any indication of military escalation immediately increased the risk premium on prices.
Price increases were also triggered by sharp movements on Thursday, when both benchmark contracts closed up more than 3% and briefly surged around $5 per barrel after reports of Tehran's air defenses and internal Iranian political dynamics were seen as adding to uncertainty. This situation makes prices increasingly sensitive to security headlines and the status of negotiations.
From the US side, President Donald Trump stated that Iran might temporarily increase its weapons during the two-week ceasefire, but added that the US military could destroy it "in a day." Some view the ceasefire phase as increasingly fragile; Haitong Futures believes that if US-Iran talks fail to make key progress by the end of April and fighting continues, oil prices could potentially reach new highs this year.
Meanwhile, China Futures analysts warn that prolonged disruptions in Hormuz could push global crude and refined product inventories below the five-year seasonal average by late May or early June, potentially reinforcing the supply risk premium. Elsewhere in the region, Trump said Israel and Lebanon had agreed to extend the ceasefire by three weeks, but tensions remained high as Israel had previously stated it was ready to resume attacks on Iran.
5 headline points:
- Oil rose on fears of a new escalation after Iran released a video of a ship boarding in Hormuz and reports of "hostile targets" in Tehran.
- Brent rose to $106.06 and WTI to $96.56; both recorded large weekly gains (Brent +17.13%, WTI +15.13%).
- The closure of Hormuz had widespread implications as this route typically carries about 20% of global oil and LNG supplies.
- Prices surged sharply on Thursday amid reports of air defense and political uncertainty, confirming a highly headline-driven market.
- Supply risks have the potential to persist; some analysts believe that a breakdown in talks until the end of April and continued disruptions could push oil to new highs and put pressure on global inventories. (asd)
Source: Newsmaker.id*
