Key Highlights
- Both Brent crude and WTI have surged approximately 12% over the past week amid escalating U.S.-Iran military confrontations
- Thursday marked the sixth consecutive evening of American military operations targeting Iran
- Tehran has instructed Houthi partners to stand ready to shut down the Red Sea oil passage should the U.S. target Iranian electrical grid facilities
- Maritime traffic navigating the Strait of Hormuz has declined significantly following a renewed U.S. naval blockade on Iranian harbors
- American petroleum reserves decreased by 1.7 million barrels during the week concluded July 10, signaling market tightening
Crude oil markets posted gains on Friday, concluding a week that saw both primary benchmarks advance roughly 12%. Brent crude futures climbed to approximately $84.38 per barrel, while U.S. West Texas Intermediate reached levels near $78.71 per barrel.
The upward momentum followed six consecutive nights of military strikes exchanged between the United States and Iran. American military officials characterized their recent operations as efforts to diminish Iranian military capacity.
Iran’s armed forces executed fresh assaults on American installations across the Middle East on Friday morning, including what Tehran characterized as its inaugural direct attack within Syria. The Iranian military also deployed missiles and unmanned aerial vehicles toward U.S. military installations in adjacent nations, including a recently enhanced air base located in Jordan.
Brent crude is positioned to record its third consecutive weekly advance. WTI appears set for its second straight weekly increase.
Critical Shipping Routes Face Closure Threats
The Strait of Hormuz represents a vital artery for worldwide oil supply. Approximately 20% of global oil and refined products transit through this strategic waterway.
Maritime activity through the strait experienced a notable decline this week following the United States’ reinstatement of a naval blockade targeting Iranian ports. This bottleneck has introduced a geopolitical risk factor into pricing.
Tehran has also communicated to its Houthi partners to prepare for closing the Red Sea petroleum export corridor. Such action would be triggered if American forces strike Iranian electrical infrastructure, according to three sources referenced by Reuters.
“The looming possibility of the Red Sea emerging as an additional major supply disruption location is further complicating the worldwide oil landscape,” noted Tim Waterer, chief market analyst at KCM Trade.
The International Energy Agency’s Executive Director Fatih Birol stated on Thursday that petroleum security continues to represent a significant worry. “We should be concerned, and I am concerned, if conditions do not stabilize in the coming weeks,” he remarked.
A tenuous ceasefire agreement reached in June has essentially disintegrated. Regional intermediaries including Qatar, Egypt and Pakistan continue pursuing diplomatic discussions. Qatar’s defence ministry reported its forces prevented an Iranian missile strike early Friday, with one child sustaining injuries from debris during interception procedures.
Inventory Numbers Reinforce Price Rally
U.S. stockpile figures released this week indicated the crude market is experiencing tightening conditions. The Energy Information Administration documented that American crude inventories decreased by 1.7 million barrels during the week ending July 10, reducing total reserves to 409.7 million barrels.
Gasoline reserves similarly contracted by 1.5 million barrels throughout the identical timeframe. Prior figures from the American Petroleum Institute revealed a more modest withdrawal of approximately 564,000 barrels, falling short of analyst projections.
Notwithstanding the substantial weekly advances, certain analysts suggest the market has remained more composed than geopolitical developments might indicate. “There is an absence of panic in oil trading circles presently,” remarked Tamas Varga of PVM Oil Associates.
From a technical perspective, analysts at IG indicated WTI might challenge the mid-$80s level provided it maintains support above the mid-$70s range.
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