Oil rises on intensifying US-Iran hostilities, threat of Red Sea closure

SEATTLE (Oil Monster): Oil prices rose on Friday after the U.S. and Iran stepped up ​attacks across the Gulf, with their broken truce limiting oil flows out of the ‌Strait of Hormuz and with Tehran asking the Houthi political and military organisation to stand ready to shut the Red Sea export route.

Brent crude futures rose 70 cents, or about 0.83%, to $84.93 a barrel at 0312 GMT, while U.S. West ​Texas Intermediate futures rose 81 cents, or 1.03%, to $79.76 a barrel, erasing losses from the ​previous session.

Both benchmark contracts have climbed nearly 12% this week, with Brent on ⁠track for a third consecutive weekly gain and WTI on pace for a second weekly gain.

"The potential ​threat of the Red Sea becoming another major supply disruption point is further complicating the global oil ​outlook," said Tim Waterer, chief market analyst at KCM Trade. He noted the "dual-risk scenario" was keeping a geopolitical premium embedded in both benchmarks.

For the first time since a memorandum of understanding paused fighting last month, the U.S. launched two ​major waves of air strikes in a single day on Wednesday, mostly at targets near Iran's southern ​coast. It kept firing on Thursday.

Meanwhile, Qatar's defence ministry said its armed forces thwarted an Iranian missile attack early on ‌Friday, ⁠while the interior ministry said a child was injured by shrapnel resulting from interception operations.

"Oil security is still a critical issue," International Energy Agency Executive Director Fatih Birol said on Thursday at a Council on Foreign Relations event in Washington.

"We should be worried, and I am worried, if the situation does not improve ​in the next few ​weeks," he said.

In a statement, ⁠the U.S. Central Command said American forces began "a new wave of strikes against Iran for the sixth consecutive night to further degrade Iranian military capabilities" at ​2 p.m. EDT (1800 GMT), or 9:30 p.m. in Tehran.

Tehran has countered with ​missiles and drones ⁠aimed at U.S. military bases in neighbouring states, including a barrage at a recently expanded air base in Jordan.

Adding to oil supply concerns, Iran's leadership has told its Houthi allies to be prepared to close ⁠the Red ​Sea oil route if the U.S. strikes Iranian power infrastructure, ​three sources told Reuters.

IG analysts said technically, WTI could test the mid-$80s if it holds above key support in the mid-$70s.

Courtesy: www.reuters.com