Key Highlights
- Brent crude climbed past $111 per barrel while WTI approached $106, marking a 12% weekly increase
- Crude prices have jumped over 25% in the last two weeks amid the ongoing Strait of Hormuz closure
- Iranian leadership committed to defending control of the strategic waterway and continuing nuclear development
- ConocoPhillips executives alert markets to potential “critical shortages” beginning in June for countries relying on imports
- American crude exports reached unprecedented levels as international markets seek alternatives to Middle Eastern supplies
Global crude prices extended their rally on Friday as the military confrontation between the United States and Iran stretched into its third month without meaningful diplomatic progress, leaving a crucial oil transportation corridor effectively blocked.
Brent crude futures for July delivery climbed above the $111 per barrel threshold. West Texas Intermediate traded near $106 per barrel. Both key benchmarks registered approximately 12% gains for the week and have surged more than 25% across the past two-week period.
The Strait of Hormuz, a critical chokepoint that previously facilitated roughly 20% of global oil shipments before hostilities commenced, continues to be essentially non-operational. This disruption has created significant volatility across international energy markets with dramatic price fluctuations observed in recent sessions.
President Donald Trump confirmed that the American naval blockade surrounding Iranian ports continues to operate effectively and will remain deployed. While he previously expressed optimism that economic sanctions might bring Iran to the negotiating table, diplomatic discussions have shown minimal advancement.
Iran’s Supreme Leader Mojtaba Khamenei released an uncommon public declaration on Thursday, asserting that Tehran will not abandon either its nuclear enrichment capabilities or ballistic missile development programs. He additionally emphasized Iran’s determination to maintain dominance over the Strait of Hormuz.
The pronouncement offered little indication of potential near-term de-escalation opportunities. While a temporary ceasefire between Washington and Tehran technically remains active, substantive diplomatic advancement has been scarce.
Energy Shortage Alert
ConocoPhillips Chief Financial Officer Andy O’Brien cautioned market analysts on Thursday that certain nations could encounter “critical shortages” of petroleum products as early as June.
O’Brien elaborated that oil tankers which departed Persian Gulf terminals in late February have now completed their voyages and discharged their cargoes. With this supply cushion depleted, nations heavily reliant on crude imports may experience significant constraints within a matter of weeks.
“We are going to start to see some import-dependent countries potentially start to face critical shortages as we get into the June-July time frame,” O’Brien said.
Thursday reports also indicated that Trump is considering additional military strategies, including options to forcibly reopen the contested waterway, execute further strikes against Iranian infrastructure, or conduct special operations missions to confiscate Iranian enriched uranium stockpiles.
Physical Supply Constraints Intensify
Market observers at ANZ highlighted that the differential between paper oil prices and physical crude valuations is contracting. This convergence signals that genuine supply constraints are materializing in physical markets for the first time since the conflict erupted.
American crude oil exports skyrocketed to all-time highs last week as global purchasers increasingly shifted toward U.S. production to compensate for unavailable Middle Eastern supplies.
Japan’s senior currency authority announced readiness to conduct interventions in crude oil futures trading venues, where speculative activity has been influencing yen valuations. Japanese officials entered currency markets on Thursday to purchase yen, triggering the most significant decline in the Bloomberg Dollar Spot Index since January.
Trading activity remained subdued in Asian sessions on Friday, with numerous major economies including China, Germany, and France observing Labor Day holidays.
Brent’s June delivery contract concluded trading on Thursday after touching a four-year peak exceeding $126 per barrel.
