Oil prices surged nearly 5% on Friday as escalating hostilities between the United States and Iran increased concerns about global energy supplies.
Markets were already dealing with sharply reduced shipping through the Strait of Hormuz. Fresh warnings about a possible closure of the Red Sea route added another layer of risk for oil traders.
Brent and WTI Oil Prices Jump
Brent crude futures gained $3.98, or 4.73%, to reach $88.21 per barrel by 2:16 p.m. ET.
Meanwhile, US West Texas Intermediate crude rose by $3.80, or 4.81%, to $82.75 per barrel.
Both major oil benchmarks were heading for weekly gains of approximately 16%. Brent was on course to record its third consecutive weekly increase, while WTI was set for a second straight weekly gain.
Diesel Markets Face Severe Supply Pressure
Diesel refining margins climbed to record levels on Friday as concerns about fuel availability intensified.
Low-sulphur gasoil futures traded as high as $66.25 above Brent crude, highlighting the pressure facing global diesel markets.
The Middle East is an important exporter of diesel and other refined fuels. Restricted movement through the Strait of Hormuz, combined with attacks on energy infrastructure, has tightened supplies and supported higher prices worldwide.
Strait of Hormuz Traffic Declines
The collapse of the US-Iran truce has caused oil shipments through the Strait of Hormuz to fall sharply.
Iran has reportedly targeted vessels travelling through the waterway, increasing risks for shipping companies and energy traders.
Before the conflict, approximately 20% of the world’s oil supply passed through the Strait of Hormuz. Any prolonged disruption could therefore have significant consequences for global oil prices and fuel availability.
US and Iran Expand Military Operations
Fighting intensified further on Friday as both countries expanded their military operations across the Middle East.
The United States reportedly targeted bridges and an airport inside Iran. Tehran responded by striking a power facility and a desalination plant in Kuwait.
Iran also said it had launched additional attacks against US facilities across the region. These included its first direct strike in Syria following six consecutive nights of US attacks on Iranian military targets.
Red Sea Closure Threat Raises New Concerns
Iran has reportedly urged the Houthis to block the Red Sea shipping route if the United States attacks Iranian power infrastructure.
Such a move could have major consequences for Saudi Arabian oil exports. The country has redirected much of its crude away from the Strait of Hormuz through the East-West Pipeline.
The pipeline transports oil to the Red Sea port of Yanbu, allowing Saudi Arabia to avoid the increasingly dangerous Hormuz route.
PVM Oil Associates analyst Tamas Varga warned that any disruption to Red Sea shipping would represent a serious threat because of the volume of Saudi crude now passing through Yanbu.
Saudi Arabia Redirects Crude Exports
Saudi Arabia has reportedly diverted more than 70% of its normal daily crude exports to Yanbu since the conflict began.
Shipments from the Red Sea port averaged around 4 million barrels per day in recent weeks. That compares with approximately 973,000 barrels per day during the same period last year.
The sharp increase highlights how heavily Saudi Arabia now relies on the Red Sea route to maintain energy exports.
A closure or major disruption could restrict another crucial supply corridor and place additional upward pressure on oil prices.
Qatar Reports Iranian Missile Attack
Qatar’s defence ministry said its armed forces intercepted an Iranian missile attack early on Friday.
The country’s interior ministry also reported that a child was injured by debris during the interception operation.
The incident added to concerns that the conflict could spread further across the Gulf and threaten more regional infrastructure.
Ukraine Targets Russian Oil Refinery
Energy infrastructure also came under pressure in another conflict zone.
Ukraine’s military said it attacked a Russian oil refinery in the Yaroslavl region on Thursday.
The strike added to broader concerns about global fuel supplies at a time when Middle Eastern oil flows are already facing severe disruption.
Oil Markets Remain Focused on Supply Risks
Oil traders are closely watching developments in the Strait of Hormuz, the Red Sea and key Gulf energy facilities.
Any further escalation could disrupt additional oil and fuel shipments. However, signs of de-escalation or the reopening of important shipping routes could reduce some of the geopolitical premium currently supporting crude prices.
For now, fears of wider regional disruption continue to drive Brent and WTI oil prices higher.
