Oil prices continued to climb in Asian trading on Friday as market participants reacted to fresh indications that the Strait of Hormuz may remain effectively closed to certain vessels. Traders priced in elevated geopolitical risk after media accounts said an Iranian parliamentary committee is examining a bill that would forbid U.S. and Israel-linked ships from transiting the vital shipping lane.
As of 20:33 ET (00:33 GMT), October Brent futures traded at $83.65 per barrel, up 1.4%. West Texas Intermediate crude for the nearby contract rose 1.3% to $78.26 per barrel. Both benchmarks had posted sizable gains in the previous session, with Brent and WTI climbing nearly 4% and 3%, respectively, though each was still on track for weekly losses greater than 7%.
According to the reports, the proposed legislation would not only bar specified vessels but also impose penalties on transgressors amounting to as much as 20% of cargo value. At the same time, Iran's Islamic Revolutionary Guard Corps said it had struck "hostile targets" in the Strait of Hormuz, statements that reinforced concerns about continued disruption to shipping.
Earlier in the week, oil retreated amid hopes that Tehran and Oman were close to finalizing a deal to reopen passage through the Strait. Those hopes have since dimmed after details emerged suggesting any reopening might exclude U.S. and Israeli ships, leaving the market focused on sustained geopolitical risk rather than rapid de-escalation.
The Strait of Hormuz is a key artery for energy flows, carrying roughly one-fifth of global shipments of oil and liquefied natural gas. Any restrictions on access therefore carry outsized implications for global energy supply and for markets sensitive to crude and gas logistics.
Additional developments in the region and beyond provided further impetus to prices. Fighting elsewhere in the Middle East intensified, with Yemen's Iran-aligned Houthi forces claiming attacks on Saudi military locations and infrastructure, raising concerns about the security of Red Sea shipping lanes. Separately, a Ukrainian drone strike was reported to have set a major Russian refinery on fire, a development that market participants said could tighten supply expectations.
Investors were also monitoring domestic economic data for direction on monetary policy. The U.S. nonfarm payrolls report, due later on Friday, was cited as an important input for expectations around the Federal Reserve's interest rate trajectory - higher interest rates are typically viewed as slowing economic activity and weighing on fuel demand.
Short takeaway: Prices rose as legislative moves in Iran and reported military actions in the Strait of Hormuz increased risks to oil shipment flows, with supplementary supply concerns from regional attacks and a refinery fire in Russia. Market attention remained split between geopolitical developments and upcoming U.S. payrolls data that could influence demand expectations.