Oil Prices Jump on Impasse Over Reopening the Strait of Hormuz
“Oil prices rose as talks between the U.S. and Iran over a peace deal stalled, particularly concerning Iran’s uranium stockpile and potential transit fees in the Strait of Hormuz. Brent crude reached over $104 a barrel, while West Texas Intermediate crude rose to around $98 a barrel. Analysts predict disruptions in the strait will ease later in the year but could continue to impact oil prices and global economies.
Oil prices jumped on Friday as investors saw few signs of concrete progress in talks to establish a peace deal between the United States and Iran.
Nearly three months since the fighting began, disagreements remain over the fate of Iran’s uranium stockpile and reports that Iran and Oman may impose transit fees on vessels passing through the Strait of Hormuz. The Trump administration has warned against charging ships for passing through the strait, a critical shipping lane for oil and gas.
Under a fragile cease-fire, negotiations over the points of an enduring peace agreement appear far from settled.
Oil prices jump.
The price of Brent crude, the global benchmark for oil, rose nearly 2 percent to more than $104 a barrel.
West Texas Intermediate crude, the U.S. benchmark, rose about 1 percent to around $98 a barrel.
Price of Brent crude oil
How much the international benchmark costs
Stocks gain.
Futures on the S&P 500 pointed to a modest increase when stocks resume trading in the United States on Friday.
Stocks in Asia, where countries import vast quantities of oil and gas, posted gains in most major markets. Japan’s Nikkei 225 and stocks in Taiwan rose more than 2 percent. Markets in mainland China, Hong Kong and South Korea were all higher.
In Europe, stocks rallied. The Stoxx 600, a broad-index that tracks the region’s largest companies, gained about half a percent.
S&P 500 index
How stocks are trading in the United States
The bond sell-off subsides.
The 10-year U.S. Treasury yield moderated somewhat, slipping to 4.55 percent on Friday. That was a small reversal after an extended rise that pushed yields to two-decade highs this week. The 10-year yield was around 4 percent before the war started.
The run-up in yields has fed through to a wide range of loans, including mortgage rates. This week, the average for a 30-year, fixed-rate mortgage hit 6.51 percent, the highest rate since August, casting a chill on the U.S. housing market.
U.S. 10-Year Treasury Yield
Gasoline prices ticked lower.
Gas prices fell by a penny on Friday, to a national average of $4.55 a gallon, according to the AAA motor club. The increase has raised the cost for drivers by more than 50 percent since the war began.
Gas prices don’t move in lock step with crude, usually trailing increases or drops by a few days.
The average price of diesel also dropped by a cent to $5.65 on Friday, up 50 percent since the start of the war.
What they are saying: ‘What happens in Hormuz won’t stay in Hormuz’
Analysts at S&P Global Ratings said that they assume the disruptions to traffic in the Strait of Hormuz “will ease in the second half of the year.” Still, the ripple effects will continue to be felt around the world for a long time — or, as they put it, “what happens in Hormuz won’t stay in Hormuz.”
Even after a reopening, “later and lower volumes” of energy supplies traveling through the strait could put upward pressure on oil prices, which the analysts expect to average around $100 per barrel through the end of the year. Damage to oil infrastructure may also limit production beyond 2026, they note, resulting in “more persistent price pressures and deeper economic disruptions.”
Instead of creating “clear winners and losers,” the energy shock has highlighted “varying levels of vulnerability” among the world’s economies, the analysts concluded, with implications for debts, deficits and credit ratings.“
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