Oil prices are expected to post weekly gains on Friday, even with the recent US decision permitting temporary purchases of Russian oil and refined products stuck at sea.
This development follows an announcement by the US Treasury, under Secretary Scott Bessent, that a 30-day licence has been granted to countries wishing to buy these sanctioned Russian oil products, Reuters reported.
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By 04:00 GMT on Friday, Brent crude futures for May delivery had risen by $0.10 to $100.56 per barrel (bbl), setting the stage for an estimated 9% increase over the week.
Meanwhile, US West Texas Intermediate (WTI) crude for April dropped slightly by $0.16 to $95.57/bbl but was still headed for a 7% weekly gain.
The US Government aims to address escalating energy prices in the context of increased regional tensions.
These tensions have escalated following combined US and Israeli attacks on Iran as part of Operation Epic Fury, and subsequent retaliations, which have disrupted shipping through the critical Strait of Hormuz.
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By GlobalDataThis disruption has significantly impacted Middle Eastern oil and gas flows, contributing to increased energy prices.
The announcement came shortly after the US Energy Department revealed plans to release 172 million barrels (mbbl) of oil from its Strategic Petroleum Reserve in a bid to counter escalating prices. This strategy is part of a coordinated effort with the International Energy Agency (IEA), which plans to release a total of 400mbbl globally.
In response, Iran’s new supreme leader, Mojtaba Khamenei, stated that Iran would continue its position of keeping the Strait of Hormuz closed as leverage against adversaries.
However, US Treasury Secretary Scott Bessent told Sky News in an interview that the US, potentially alongside an international coalition, will escort vessels through the Strait of Hormuz when military conditions permit.
Meanwhile, Iraqi waters witnessed attacks on two fuel tankers by explosive-loaded Iranian boats, according to Iraqi security officials on Thursday. An Iraqi official reported to state media that operations at the country’s oil ports have completely ceased.
According to a GlobalData TS Lombard report authored by Dario Perkins, rising energy costs are still modest compared with the severe energy shocks of the 1970s. Even so, they could add up to 1% to headline inflation and reduce consumer spending power, particularly in countries dependent on liquefied natural gas.
Oil prices have risen by more than 20% since the conflict began. The ongoing situation may worsen depending on the conflict’s duration and scale.
The conflict has not yet radically altered the global economic outlook, and a swift resolution could result in minimal impact, allowing growth to continue as anticipated. However, a prolonged or expanded conflict could hinder economic recovery and complicate central banks’ efforts to lower interest rates, the report added.
