Oil rises on intensifying US-Iran hostilities and threat of Red Sea closure

• The U.S. launched airstrikes against Iran for six consecutive nights, targeting sites near Iran's southern coast, while Tehran responded with missiles and drones at U.S. bases in neighboring states
• Iran has instructed Houthi allies to prepare to close the Red Sea oil route if U.S. forces strike Iranian power infrastructure, adding to supply disruption fears
• IEA Executive Director Fatih Birol warned that oil security remains 'a critical issue' and expressed concern if the situation does not improve within weeks

Oil Prices Rise on US-Iran Conflict and Red Sea Closure Threat

Market Movement:

Oil prices climbed on Friday as US-Iran tensions escalated in the Gulf region. Brent crude rose $1.05 (1.25%) to $85.28/barrel, while WTI increased $1.03 (1.3%) to $79.98/barrel by 0118 GMT. Both benchmarks have surged nearly 12% this week, with Brent posting its third consecutive weekly gain and WTI its second.

Key Developments:

The US launched unprecedented military action against Iran, conducting two major waves of airstrikes on Wednesday targeting Iran's southern coast, with continued strikes through Thursday—marking six consecutive nights of operations. This represents the first major escalation since a ceasefire memorandum paused hostilities last month. Iran has retaliated with missile and drone attacks on US military bases in neighboring countries, including a strike on an expanded air base in Jordan.

Supply Threat:

Critical oil transit routes face potential disruption. Three sources informed Reuters that Iran has instructed its Houthi allies to prepare for closing the Red Sea oil route if US forces strike Iranian power infrastructure. The Strait of Hormuz, a vital global oil chokepoint, is already experiencing limited flow.

Market Outlook:

International Energy Agency Executive Director Fatih Birol expressed concern at a Council on Foreign Relations event, warning that oil security remains critical and the situation requires improvement within weeks. IG analysts suggest WTI could test mid-$80s levels if it maintains support above mid-$70s.

Additional Development:

Trump Media & Technology Group announced a paid data feed service providing expedited access to influential Truth Social posts, including President Trump's, which frequently impact oil markets.