HOUSTON — Oil prices rose on Friday as uncertainty over negotiations to reopen the Strait of Hormuz revived concerns about the timing and conditions for restoring traffic through the key energy shipping route.
Brent crude futures settled $1.06, or 1.3%, higher at $83.55 a barrel, while U.S. West Texas Intermediate futures gained 89 cents, or 1.15%, to $78.18. Despite Friday's gains, Brent was on course for a weekly decline of more than 8%, while WTI was set for a loss of more than 7%.
The price moves followed a volatile week in which oil fell sharply on signs that an agreement involving Iran and Oman could help restore shipping through the strait, before concerns over the terms of any reopening pushed prices higher.
About a fifth of the world's oil and liquefied natural gas normally passes through the Strait of Hormuz, which lies between Iran and Oman. Traffic has been severely disrupted since the conflict involving Iran began in late February, adding pressure to global energy supply chains.
Iran and Oman were reported to have agreed on a route for ships through the strait, but the conditions for a broader reopening remained unclear. In particular, questions remained over whether U.S.-flagged, U.S.-owned or U.S.-bound vessels would be permitted to transit.
Iran is seeking fees equivalent to 5% to 7% of cargo values for ships using the waterway, according to a senior Iranian official. Oman has been discussing fees of about 3%, while Washington wants vessels to transit without such charges, according to Reuters reporting. Industry sources also said U.S. sanctions and insurance restrictions could complicate implementation of any agreement.
The uncertainty has kept oil markets sensitive to developments surrounding the negotiations. Vandana Hari, founder of oil market analysis provider Vanda Insights, said the market remained unclear about what would be required to finalize an agreement.
Andrew Lipow, president of Lipow Oil Associates, said traders were assessing whether an Iran-Oman arrangement would permit different categories of U.S.-linked vessels to use the strait.
Earlier in the week, reports of progress toward ending the conflict pushed oil prices lower, with Brent closing below $80 a barrel on Tuesday for the first time since July 13. Prices subsequently recovered as uncertainty over the reopening persisted.
The latest market moves leave traders awaiting clearer terms for the proposed arrangement and confirmation that commercial shipping can resume through the Strait of Hormuz on a broader basis.
