Oil prices extended their gains into the weekend as diplomatic efforts between Iran and Oman to reopen the Strait of Hormuz failed to produce an agreement, keeping global crude supply under pressure and Brent crude near $100 per barrel.
The Strait of Hormuz, through which roughly 20% of the world’s seaborne oil flows pass daily, has been effectively closed since the onset of the US-Israeli conflict with Iran in late February. Oman has been mediating between Tehran and Washington in an effort to establish a framework for the strait’s future management, but both sides remain far apart on key terms.
Iran has set tough conditions for any reopening, including a ban on US and Israeli-flagged vessels transiting the waterway. Washington, meanwhile, has maintained that the strait must be fully reopened without restrictions as part of any durable settlement. A US official said earlier in the week that a deal could come “today or tomorrow,” but that optimism has so far proved premature.
Complicating the outlook further, Houthi militants in Yemen claimed responsibility for an attack on a Saudi refinery near the Red Sea on Saturday, marking a new escalation in the broader regional conflict. The claim, if confirmed, would represent the first direct Houthi strike on Saudi energy infrastructure since the group began operations in solidarity with Iran.
The IEA coordinated a release of 400 million barrels from member-nation strategic reserves earlier this year, but analysts noted this provides less than three weeks of supply if the strait remains fully shut. The lack of a Hormuz resolution continues to support elevated risk premiums in crude markets, with WTI crude settling near $93 per barrel.
Trading volumes have been volatile, with open interest rising sharply even as prices fluctuated, reflecting both fresh short positioning by speculators hedging for a potential deal and long positions from traders betting on a prolonged disruption.
The prolonged strait closure has already forced major importers to seek alternative routes and suppliers. China’s Sinopec has stepped up Russian crude imports to offset lost Middle Eastern supply, while European refiners have turned to West African and American barrels at significant premium.
Markets will watch closely for the next round of Oman-mediated talks and any shifts in US posture. A sustained agreement on Hormuz management remains the single most consequential variable for oil prices through the rest of 2026.
Sources: Bloomberg – Latest Oil Market News, Reuters Markets
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