Market Reaction
Oil prices extended sharp gains on Friday following reports that Iran is moving to bar U.S. and Israeli‑linked vessels from the Strait of Hormuz. At 03:06 ET (07:06 GMT), Brent crude futures for October delivery rose 1.1% to $83.43 per barrel, while West Texas Intermediate (WTI) futures increased 0.8% to $77.91 per barrel. In the prior session, Brent and WTI had climbed nearly 4% and 3% respectively, but both benchmarks were still on track for weekly losses exceeding 7%.
Iranian Legislative Action
Media reports indicated that an Iranian parliamentary committee is reviewing legislation that would prohibit U.S. and Israeli ships from transiting the waterway. The draft law proposes penalties of up to 20% of the cargo value for vessels that violate the ban. The Islamic Revolutionary Guard Corps (IRGC) also announced that it had struck "hostile targets" in the Strait of Hormuz.
Supply‑Side Context
The Strait of Hormuz handles roughly one‑fifth of global oil and liquefied natural gas shipments, making any restriction on traffic a major concern for energy markets. Earlier in the week, oil prices had retreated on optimism that Tehran and Oman were close to finalising an agreement to restore full shipping through the strait, which would have eased fears of prolonged supply disruptions. Those hopes faded after details emerged that any reopening could exclude U.S. and Israeli vessels, keeping geopolitical risk firmly in focus.
Additional Regional Risks
Supply concerns were further amplified by intensified conflict elsewhere in the region. Yemen’s Iran‑aligned Houthis claimed attacks on Saudi military positions and infrastructure, raising worries about Red Sea shipping routes. A Ukrainian drone strike reportedly set a major Russian refinery ablaze, adding another layer of supply uncertainty.
Market Outlook
Investors were also awaiting the U.S. non‑farm payrolls report due later on Friday, seeking clues on the Federal Reserve’s interest‑rate trajectory. Higher rates could theoretically slow economic activity and dampen fuel demand, influencing oil price dynamics.