Week in Review – Oil Prices Hold Near $100 as Strait of Hormuz Disruptions Persist

Oil markets remain on edge as the Iran conflict continues to disrupt shipping through the Strait of Hormuz, pushing crude prices sharply higher this week. Brent crude briefly climbed above $100 per barrel for the first time since mid-2022, with prices surging as high as $119 earlier in the week amid attacks on tankers and threats to close the critical energy corridor.

This morning, prices eased slightly as an India-flagged tanker successfully exited the Strait of Hormuz carrying gasoline bound for Africa, offering a sign that limited shipping activity is still possible. However, analysts caution that the movement does not signal a reopening of the corridor, and disruptions to trade through the strait continue. Brent opened the day at nearly $99 per barrel, while WTI hovered around $92.

The Strait of Hormuz is set to remain a lever in the conflict. In a statement posted to his official website, Iran's Supreme Leader Mojtaba Khamenei said the "lever of the Strait of Hormuz must certainly continue to be used," adding that Iran could open additional fronts against its adversaries if necessary. The strait is a critical chokepoint for global energy trade, typically handling a large share of oil exports from the Persian Gulf.

Estimated oil flows through the Strait of Hormuz have fallen dramatically, dropping by roughly 19.4 million barrels per day, with vessel traffic stabilizing near 0.6 million barrels per day in recent days. Some shipments have been redirected via alternative routes, such as Saudi Arabia's Yanbu port on the Red Sea and the UAE's Fujairah terminal on the Gulf of Oman, though these routes have only partially offset the decline in exports from the region.

Security concerns remain elevated across the Persian Gulf. The United Kingdom's defense secretary said it is likely that Iran has begun laying naval mines in the strait, although Iranian officials deny the claim. Attacks on vessels have also continued to raise risks to energy infrastructure and shipping routes. On Thursday, two fuel tankers in Iraqi waters were struck by explosive-laden boats, forcing Iraqi oil ports to halt operations.

Governments have begun implementing measures to stabilize energy markets as the disruption persists. The International Energy Agency (IEA) announced that member countries will make 400 million barrels of oil available from strategic reserves over the next four months, the largest coordinated stock release ever proposed. The United States plans to contribute 172 million barrels from its Strategic Petroleum Reserve, while officials are also considering a temporary Jones Act waiver to help move refined products from the Gulf Coast to the East Coast and ease regional fuel prices.

The U.S. government has also issued a 30-day authorization allowing buyers to purchase Russian oil cargoes already at sea, a move designed to reduce logistical bottlenecks and ease supply tightness without significantly benefiting Russia financially. At the same time, U.S. Energy Secretary Chris Wright indicated that the U.S. Navy could begin escorting commercial vessels through the Strait of Hormuz by the end of March if security conditions require it.

Despite these measures, the risk of further escalation remains a major concern for energy markets. President Donald Trump warned that the United States could strike Iran "very hard" in the coming week if hostilities continue, while Iranian officials responded with threats of retaliation. Iran's Secretary of the Supreme National Security Council said on social media that the country would continue the fight until its adversaries regret what he described as a "grave miscalculation."

The larger concern for markets now extends beyond shipping delays. Analysts warn that damage to major energy infrastructure could create a longer-lasting loss of supply. Facilities such as Iran's Kharg Island export terminal, the country's primary crude export hub, are seen as particularly vulnerable. Any attack on major export infrastructure could trigger retaliatory strikes across the Gulf and significantly deepen the global supply disruption.

Prices in Review

Crude prices experienced high volatility during the week, beginning at $98.00 on Monday and surging intraday to $119.48, the highest level recorded during the period. Prices then reversed sharply on Tuesday, falling to $80.20, reaching a daily high of $91.48. The market stabilized mid-week, with prices recovering to $86.89 on Wednesday and continuing higher to $89.32 on Thursday. On Friday, crude opened at $96.74, nearly returning to Monday's level. Over the week, crude prices declined $1.26 per barrel, representing a 1.3% decrease, despite the significant swings seen earlier.

Diesel prices also moved throughout the week, beginning at $3.7821 on Monday before falling to $3.2423 on Tuesday, the week's lowest level. Prices recovered slightly on Wednesday to $3.4110 and continued to climb on Thursday to $3.7264. On Friday, diesel rose further to $3.9535, reaching the highest level of the week. Overall, diesel prices increased by $0.1714 per gallon, representing 4.5% rise during the week.

Gasoline started the week at $2.8400 on Monday and declined to $2.6429 on Tuesday, dropping to $2.5754 during the day, the week's low. Prices then rebounded to $2.711 on Wednesday and continued higher to $2.8185 on Thursday. This morning, gasoline prices opened at $2.9821, representing an overall increase of $0.1421 per gallon, or 5.0%, during the week.