A maze of crude oil pipes and valves is pictured during a tour by the Department of Energy at the Strategic Petroleum Reserve in Freeport, Texas.
Richard Carson | Reuters
Oil prices edged higher in choppy trading Friday as tensions around the Strait of Hormuz deepened, with the vital shipping lane still largely closed despite a ceasefire deal between the U.S. and Iran.
West Texas Intermediate crude futures for May delivery gained 0.4% to $98.29 per barrel as of 1:06 pm. ET. International benchmark Brent crude futures for June delivery were up 0.56% at $96.48 per barrel.
U.S. President Donald Trump on Thursday warned Iran to “stop now” if it was charging tankers to transit the strait, a move that risks undermining a 2-week ceasefire agreement that was contingent on reopening the waterway.
Shipping flows through the chokepoint, which handled about 20% of global oil supply before the war, remained severely restricted, keeping markets on edge.
“Iran is doing a very poor job, dishonorable some would say, of allowing Oil to go through the Strait of Hormuz,” Trump said in a Truth Social post.
Trump’s top economic advisor Kevin Hassett said Thursday that getting even one oil tanker across the strait would provide a “huge chunk of what’s missing.”
Additionally, attacks on Saudi Arabia’s energy infrastructure has impacted its oil production capacity.
The strikes have cut oil output capacity by around 600,000 barrels a day and trimmed flows through the East-West Pipeline by roughly 700,000 bpd, according to the Saudi Press Agency, citing a Ministry of Energy source.
Oil prices since the start of the year
Iranian strikes hit a pumping station along the East-West pipeline, according to a report from the state news agency. The pipeline transports crude from processing facilities near the Persian Gulf to the Red Sea export terminal at Yanbu.
Riyadh has leaned heavily on the pipeline as its primary export route during the conflict, as Iranian attacks have made shipments through the Strait of Hormuz increasingly unviable.
Meanwhile, separate attacks on Saudi Arabia’s Manifa and Khurais oil fields have cut the kingdom’s production by roughly 600,000 barrels per day, the Saudi Press Agency said. Several refineries have also been targeted in recent strikes, further compounding supply disruptions.
The U.S. reached a 2-week ceasefire agreement with Iran on Tuesday in return for Tehran allowing vessels to transit the strait. The chief executive of the United Arab Emirates’ state oil firm said Thursday that the waterway remains largely shut to shipping.
With Gulf imports dropping below 2 million barrels per day and voyage times stretching several weeks, Goldman’s analysts said buyers may need to rely on stockpiles and alternative supply for at least another month, even as higher fuel prices begin to weigh on demand.
— CNBC’s Justina Lee and Spencer Kimball contributed to this report.