West Texas Intermediate (WTI), the US crude oil benchmark, surged above $95.50 and is trading around $95.75 during early Asian trading hours on Friday, driven by the effective closure of the Strait of Hormuz amid conflict involving the United States, Israel, and Iran [1]. US crude oil prices have risen more than 40% since the start of the war, highlighting the significant impact of geopolitical tensions on the oil market [1]. The International Energy Agency (IEA) warned that the US-Israeli war on Iran is 'creating the largest supply disruption in the history of the global oil market' [1].
Iran’s new supreme leader, Mojtaba Khamenei, in his first public statement since being appointed, asserted that the closure of the Strait of Hormuz maritime passage should be continued as a 'tool to pressure the enemy.' He further threatened that all US military bases in the region should be immediately closed or would be attacked [1]. These statements underscore the heightened risk to oil supply routes and have contributed to the sharp rise in WTI prices.
To mitigate the economic impact of the supply disruption, the IEA announced on Wednesday that it will release a record 400 million barrels of oil from emergency reserves. This coordinated action by countries through the IEA aims to add temporary supply to the market and prevent a sharp spike in oil prices [1]. While this move may cap the upside for oil prices in the short term, the ongoing conflict and threats to key infrastructure continue to exert upward pressure.
The article also notes that supply and demand dynamics, political instability, wars, and sanctions are key drivers of WTI oil prices. The release of emergency reserves is expected to provide temporary relief, but inventory data and further developments in the conflict will remain critical factors influencing market direction [1].
CONCLUSION
WTI crude oil prices have surged above $95.50 due to the closure of the Strait of Hormuz amid escalating conflict involving the US, Israel, and Iran. The IEA's release of 400 million barrels of emergency reserves may temporarily ease supply concerns, but geopolitical risks continue to drive high volatility and market impact. Investors should closely monitor further developments and inventory data for additional market signals.