Oil Prices Climb Amid Intensifying US-Iran Tensions and Red Sea Closure Threat

Oil prices saw a modest increase on Friday, driven by heightened military actions between the United States and Iran and the looming threat of the Red Sea being shut down as a key oil export route. Brent crude futures edged up 7 cents to $84.30 a barrel, while US West Texas Intermediate futures climbed 16 cents to $79.11.

Both benchmarks have experienced substantial gains this week, with Brent on track for its third consecutive weekly rise and WTI for its second. Analysts attribute the price surge to a "dual-risk scenario" involving escalating conflicts in the Gulf and the potential disruption of vital shipping lanes. The Red Sea's closure would significantly complicate the global oil outlook, according to market analysts.

This escalation follows a period of increased hostilities. The US launched major air strikes on Wednesday and Thursday targeting Iranian-controlled areas. Simultaneously, Qatar reported thwarting an Iranian missile attack early Friday, resulting in a child's injury from shrapnel.

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The potential threat of the Red Sea becoming another major supply disruption point is further complicating the global oil outlook.

Adding to the supply concerns, sources indicate that Iran's leadership has directed the Houthi movement in Yemen to be ready to close the Red Sea oil route should the US target Iranian power infrastructure. This geopolitical tension is maintaining a significant premium within oil benchmarks.

International Energy Agency Executive Director Fatih Birol expressed concern over the situation, stating, "Oil security is still a critical issue. We should be worried, and I am worried, if the situation does not improve in the next few weeks." Technical analysts suggest WTI could test the mid-$80s if it maintains support above the mid-$70s.

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Oil security is still a critical issue. We should be worried, and I am worried, if the situation does not improve in the next few weeks.