Key Highlights
- Brent crude surpassed $111 per barrel while WTI approached $106, marking a 12% weekly increase
- Crude prices have skyrocketed over 25% in the last fortnight due to the ongoing Strait of Hormuz closure
- Iran’s leadership pledged to maintain strategic control over the waterway while defending nuclear capabilities
- ConocoPhillips issued warnings about imminent “critical shortages” for nations reliant on imports beginning in June
- American crude shipments reached unprecedented levels as international markets seek alternatives to Middle Eastern supplies
Global energy markets witnessed continued upward pressure on Friday as the U.S.-Iran confrontation stretched into its third month without diplomatic resolution, maintaining the closure of a vital petroleum shipping channel.
Brent crude futures for July delivery climbed beyond the $111 per barrel threshold. West Texas Intermediate traded close to $106. The benchmarks posted approximately 12% gains for the week and have rallied more than 25% across the previous two-week period.
The Strait of Hormuz, a waterway that previously facilitated approximately 20% of global petroleum transit before hostilities commenced, continues to operate under effective closure. This disruption has destabilized international energy trading platforms and generated pronounced volatility in recent trading sessions.
President Donald Trump confirmed that the American naval embargo surrounding Iranian harbors is producing desired effects and will continue indefinitely. While he previously expressed optimism that economic measures might encourage Iran toward negotiations, diplomatic discussions have essentially reached an impasse.
Iran’s Supreme Leader Mojtaba Khamenei released an uncommon public declaration on Thursday, asserting that the Islamic Republic will not surrender its nuclear development or ballistic missile capabilities. He further emphasized Tehran’s determination to maintain dominance over the Strait of Hormuz.
The pronouncement offered minimal prospects for immediate tension reduction. While a ceasefire agreement between Washington and Tehran technically remains active, substantive diplomatic advancement has been negligible.
Impending Supply Crisis
ConocoPhillips Chief Financial Officer Andy O’Brien cautioned industry analysts on Thursday that certain nations could confront “critical shortages” of petroleum products as early as June.
He clarified that oil tankers that departed Persian Gulf terminals in late February have now completed their voyages. With that inventory cushion exhausted, countries with significant import dependencies may experience severe constraints within the coming weeks.
“We are going to start to see some import-dependent countries potentially start to face critical shortages as we get into the June-July time frame,” O’Brien said.
Thursday reports also indicated Trump was evaluating additional military strategies, including forcible reopening of the strategic waterway, executing further strikes against Iranian infrastructure, or conducting special operations missions to confiscate Iranian enriched uranium stockpiles.
Physical Market Constraints Intensify
Market observers at ANZ highlighted that the differential between futures oil prices and spot market valuations is contracting. This development indicates that tangible supply constraints are manifesting in actual trading conditions for the first time since the conflict’s inception.
American petroleum exports soared to historic peaks last week as international purchasers pivoted toward U.S. production facilities to compensate for unavailable Middle Eastern inventory.
Japan’s senior currency policymaker announced readiness to intervene in crude oil derivatives markets, where speculative activity has been influencing yen valuations. Japanese authorities executed currency market intervention on Thursday to support the yen, triggering the most substantial decline in the Bloomberg Dollar Spot Index since January.
Trading activity remained subdued across Asian financial centers on Friday, with numerous major economies including China, Germany, and France observing Labor Day holidays.
Brent’s June futures contract concluded trading Thursday after reaching a four-year zenith exceeding $126 per barrel.
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