A maze of crude oil pipes and valves is illustrated during a Department of Energy tour at the Strategic Petroleum Reserve in Freeport, Texas.
Richard Carson reuters
Oil prices rose on Friday as tensions deepened around the Strait of Hormuz, with the vital shipping lane still largely closed despite a ceasefire agreement between the US and Iran.
West Texas Intermediate crude futures for May delivery rose 0.55% to $98.33 a barrel. Brent crude futures, the international benchmark for June delivery, rose more than 1% to $96.91 a barrel.
US President Donald Trump on Thursday warned Iran to “stop right now” if it is charging tankers to transit the strait, a move that risks undermining a two-week ceasefire agreement that depended on reopening the waterway.
Shipping flows through the chokepoint, which handled about 20% of global oil supply before the war, remained severely restricted, keeping the market on edge.
“Iran is doing a very poor, some would even say abusive, job of allowing oil to flow through the Strait of Hormuz.” Trump said Truth in Social Post.
Kevin Hassett, Trump’s top economic adviser, said Thursday that moving even a single oil tanker across the strait would provide “a big chunk of what’s missing.”
Additionally, attacks on Saudi Arabia’s energy infrastructure have affected its oil production capacity.
The attacks have cut oil production capacity by about 600,000 barrels per day and reduced flows through the East-West Pipeline by about 700,000 bpd. According to Saudi Press AgencyCiting a source in the Energy Ministry.
Oil prices since the beginning of the year
According to a report by the state news agency, the Iranian attacks targeted a pumping station along the East-West Pipeline. The pipeline transports crude oil from processing facilities near the Persian Gulf to the Red Sea export terminal at Yanbu.
Riyadh has relied heavily on the pipeline as its primary export route during the conflict, as Iranian attacks have made shipments through the Strait of Hormuz increasingly unviable.
Meanwhile, separate attacks on Saudi Arabia’s Manifa and Khurais oil fields have cut the kingdom’s output by about 600,000 barrels per day, the Saudi Press Agency said. Several refineries have also been targeted in recent strikes, further exacerbating supply disruptions.
The United States reached a two-week ceasefire deal with Iran on Tuesday in exchange for Tehran allowing ships to pass through the strait. The chief executive of the United Arab Emirates’ state oil company said Thursday that the waterway is largely closed to shipping.
With Gulf imports falling to less than 2 million barrels per day and travel times stretching to several weeks, Goldman analysts said buyers may have to rely on stockpiles and alternative supplies for at least another month, even as higher fuel prices begin to weigh on demand.
— CNBC’s Justina Lee and Spencer Kimball contributed to this report.
