West Texas Intermediate (WTI) US Oil declined by 1.21% on Friday, trading around $88.55 per barrel at the time of writing, despite persistent geopolitical tensions surrounding the Strait of Hormuz [1]. The crude oil price remains close to recent highs and is still on track for a strong weekly gain, as ongoing hostilities between the United States and Iran continue to sustain a significant risk premium in the oil market [1].
WTI experienced selling pressure following a US military operation that escorted 40 commercial vessels carrying approximately 18 million barrels of oil through the Strait of Hormuz on Tuesday. This action temporarily eased investor concerns about supply disruptions by demonstrating the ability of tankers to navigate the strategic route under military protection [1]. However, risks remain elevated, as Iran targeted US military bases in Kuwait and the United Arab Emirates (UAE) on Thursday, and clashes around the Strait continue to fuel concerns about maritime security. US forces reportedly intercepted a cruise missile and repelled several drone attacks during the escort operation [1].
South Korea is preparing to deploy military assets to help ensure freedom of navigation through the Strait of Hormuz, highlighting the ongoing international focus on securing this critical energy corridor [1]. The possibility of further escalation between Washington and Tehran could quickly revive concerns over oil flows and limit the extent of WTI's price correction [1].
Disruptions affecting refined products are also contributing to tensions across energy markets. Average US diesel prices reached a record $5.82 per gallon on Thursday, according to GasBuddy data cited by Reuters. Hostilities between the US and Iran, combined with disruptions caused by Ukrainian strikes on Russian diesel-exporting refineries, are tightening global supplies [1]. Comments from Russian President Vladimir Putin expressing openness to potential peace negotiations provide a modest counterweight to geopolitical risks, but developments around the Strait of Hormuz and the ability of US forces to ensure safe passage for oil tankers remain the main short-term drivers for WTI [1].
CONCLUSION
WTI oil prices remain volatile, driven by heightened geopolitical tensions and supply disruptions in key energy corridors. Despite a temporary easing of supply concerns due to US military escorts, risks of further escalation and record diesel prices continue to support a risk premium in the market. The situation remains fluid, with market participants closely monitoring developments around the Strait of Hormuz and broader geopolitical dynamics.