Oil Prices Rise Over 1% Amid Uncertainty Over Strait of Hormuz Reopening, But Weekly Loss Exceeds 8%

International oil prices rose on Friday (7th), as markets continued to monitor whether the conflict with Iran could end and when the Strait of Hormuz would fully resume navigation. Due to uncertainties surrounding the United States' potential acceptance of a vessel transit route agreement between Iran and Oman, traders remained highly cautious about the pace of global oil supply recovery, pushing Brent crude futures up by more than $1 per barrel.

Brent crude futures closed at $83.55 per barrel on Friday, rising $1.06 or 1.3%; West Texas Intermediate (WTI) futures settled at $78.18 per barrel, gaining 89 cents or 1.15%. However, earlier in the week, when markets briefly believed a resolution to the Iranian conflict might be possible, oil prices had weakened significantly. Brent crude is still likely to fall over 8% this week, while WTI may drop over 7%.

Oil prices surged more than $3 on Thursday, primarily driven by renewed supply risks stemming from Iran’s geopolitical situation. Iran is currently reviewing legislation that would ban vessels from the United States and Israel from passing through the Strait of Hormuz—a critical waterway between Iran and Oman that previously handled about one-fifth of global oil and liquefied natural gas shipments before the conflict erupted.

Since the United States and Israel jointly launched attacks against Iran in late February, sparking the ongoing conflict, hostilities have now extended into their sixth month. Over recent weeks, market sentiment has repeatedly swung between expectations of an imminent end to the war and fears of further escalation, causing oil prices to fluctuate sharply based on negotiation developments.

Vandana Hari, founder of Vanda Insights, said signals regarding a potential agreement this week caused market sentiment to experience a rollercoaster-like shift. However, markets still cannot determine what conditions would be necessary for a deal to be finalized.

Another key focus for markets is the arrangement proposed by Iran and Oman for vessel passage through the Strait of Hormuz. Andrew Lipow, president of Lipow Oil Associates, noted that markets are trying to assess whether the Iran-Oman agreement allows ships flying the U.S. flag to pass through the strait, whether vessels owned by Americans can transit, and whether ships bound for U.S. ports can proceed unimpeded.

It is understood that Iran and Oman have reached consensus on shipping routes through the strait, but it remains unclear whether the United States will accept these terms. Given that the Strait of Hormuz is one of the world’s most critical energy transport corridors, any restrictions on passage could prolong supply disruptions and further deplete global commercial crude oil inventories.

Analysts pointed out that recent developments indicate the hostile state between Iran and the United States has not truly ended, leaving markets highly uncertain about when the conflict might conclude.

On the issue of toll fees, Iran demands that vessels using the Strait of Hormuz pay fees equivalent to 5% to 7% of cargo value. After a senior Iranian official disclosed this requirement, Oman began discussing a rate around 3%, while the United States insists on complete exemption from any fees.

This divergence could become a key obstacle to implementing the agreement. Four industry sources indicated that the current proposal faces significant practical challenges due to U.S. sanctions and insurance regulations—particularly arrangements involving payments to Iran, which may violate existing sanction regimes and insurance policies.

Bjarne Schieldrop, analyst at SEB Research, stated that the structure of the current Iran-Oman agreement and the powers granted to Iran are politically unacceptable for former U.S. President Trump. He added that if Trump were to accept such terms, he would likely face strong domestic political backlash.

Meanwhile, markets also worry that as long as the Strait of Hormuz cannot fully resume normal operations, global crude oil and energy inventories will continue to be drawn down. Analysts note that the longer supply disruptions persist, the longer commercial inventories will be depleted, potentially leading to greater supply pressure on energy markets.

John Kilduff, partner at Again Capital, emphasized that markets require a “full reopening” of the Strait of Hormuz—not limited or conditional access. He said the ultimate outcome and timeline of the conflict remain highly uncertain, keeping traders in a constant state of anxiety.

As a result, the oil market is currently caught in a dual tug-of-war. On one hand, if Iran and the U.S. eventually reach an agreement and the Strait resumes normal operations, the risk premium accumulated during the supply disruption could quickly dissipate, putting downward pressure on oil prices. On the other hand, if negotiations collapse, transit conditions are rejected by the U.S., or further restrictions are imposed on U.S. and Israeli-linked vessels, global energy supply risks could rise again.

In this context, despite Friday’s rebound in both Brent and WTI crude, oil prices recorded substantial weekly losses, indicating that markets are focusing more on whether the Iranian conflict can truly end and whether the Strait of Hormuz can restore global energy transportation without major restrictions—rather than daily price fluctuations themselves.