Key facts
- Oil prices were steady on Friday, on track for a monthly rise.
- Brent futures were up 0.53% at $89.50 a barrel.
- WTI crude was up 0.05% at $83.63 a barrel.
- Shipping data indicated increased traffic through the Bab el-Mandeb strait.
- Traffic through the Strait of Hormuz remained subdued.
- Geopolitical risks continue to influence the market, with Saudi Arabia seeking to lead a defense coalition.
Oil prices were steady on Friday and on track for a monthly rise as traders assessed supply flows through key maritime chokepoints and developments in U.S.-Iran talks. Brent futures were up 47 cents, or 0.53%, at $89.50 a barrel, while U.S. West Texas Intermediate (WTI) crude was up 4 cents, or 0.05%, to $83.63 a barrel.
Despite daily fluctuations, both benchmarks are poised for monthly gains, marking an end to a two-month decline. Brent is on track to rise 21% for the month, and WTI is expected to gain 18%. Analysts suggest the market is now focusing more on shipping data than on geopolitical headlines, as flows have partially recovered following escalations since February.
Shipping data indicated that 25 commodity vessels passed through the Bab el-Mandeb strait on Thursday. However, traffic through the Strait of Hormuz remained subdued, with only two tankers transiting. Talks between Iran and Oman regarding the management of the Strait of Hormuz are ongoing, though Iran has rejected Oman's proposal for joint management.
Geopolitical risks persist, with Saudi Arabia aiming to lead a coalition to enhance defense cooperation in vital energy chokepoints like the Bab el-Mandeb strait, the Red Sea, and the Gulf of Aden. Higher security risks have led to increased freight costs and insurance premiums, embedding a geopolitical risk premium into oil prices. A recent drone strike causing fires on two gas vessels in Egypt's port of Damietta has introduced a new threat to shipping through the Suez Canal, a key export route for Saudi oil amidst the ongoing U.S.-Iran tensions. The conflict has significantly disrupted traffic through both the Bab el-Mandeb strait and the Strait of Hormuz, which previously handled about a fifth of global oil and LNG supplies.