Brent and WTI both climbed more than 1% on Friday as traders waited on a U.S.-backed deal to reopen the Strait of Hormuz. A draft Iranian plan would bar U.S. and Israeli vessels from the strait, and a dispute over transit fees between Iran, Oman, and Washington is now the main obstacle to a final agreement.
Brent, WTI extend Friday gains
Crude oil prices rose Friday as traders waited on a U.S.-brokered deal to reopen the Strait of Hormuz to shipping. Brent crude gained more than 1% to close at $83.55 a barrel. West Texas Intermediate settled about 1% higher, at $78.18 a barrel.
Treasury Secretary Scott Bessent told CNBC on Tuesday that an agreement on freedom of movement through Hormuz could come as soon as Wednesday, but no deal has been announced yet.
Iran's draft plan restricts U.S., Israeli ships
Meanwhile, ship traffic through Hormuz fell 33% on Friday compared with the day before, with most vessels rerouting through Iranian waters, according to trade intelligence firm Kpler. Iran and Oman are reportedly working on a framework that would route inbound traffic through Iranian waters and outbound traffic through Omani waters. But Iranian state media published a draft plan Thursday that would ban U.S. and Israeli vessels from transiting the strait outright, requiring other nations that have harmed Iran to pay compensation before they can pass through.
Transit fees become the new sticking point
A separate dispute over money is now stalling the agreement. Iran is seeking fees of 5% to 7% of the value of cargoes passing through the strait, a senior Iranian official said, while Oman is discussing fees of about 3% and Washington wants no fees at all. Four industry sources said the proposed structure is not easily workable because of U.S. sanctions and restrictive insurance clauses on any payments.
According to Reuters, Andrew Lipow of Lipow Oil Associates said: "The longer the supply disruption goes, the longer world's commercial reserves are being drawn down." This week's developments signal that hostilities between the U.S. and Iran are not yet over, analysts said.
Roughly a fifth of the world's oil and liquefied natural gas normally passes through the strait, traffic that has been disrupted since the war between the U.S., Israel, and Iran began at the end of February.
Sources: International: Top News And Analysis, Commodities & Futures News
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