WTI Crude Oil Gains 5.9% on Iran Tensions, Strait of Hormuz Restrictions

## Catalyst Analysis: Iran Deal Collapse and Strait of Hormuz Restrictions

West Texas Intermediate crude oil futures posted a weekly gain of 5.91%, closing at $86.31 by late Thursday. This rise was driven by the perceived collapse of diplomatic talks with Iran and continued restrictions in the Strait of Hormuz, a critical global oil transit route. The market reacted to the absence of any scheduled negotiations and escalating tensions between Washington and Tehran.

## Impact on Energy Markets

Restrictions in the Strait of Hormuz, which normally handles about one-fifth of global oil and LNG, have led to significantly reduced shipping traffic. While some refiners have resorted to alternative routes via Fujairah and Saudi Arabia's Red Sea coast to mitigate supply disruptions, these measures have not restored normal flow. This uncertainty, coupled with escalating economic pressure measures against Iran by the U.S. Treasury, has maintained a premium on WTI and Brent crude.

### Winners, Losers & Uncertainty

Traders are closely monitoring sanctions and economic pressure as closely as military activity. U.S. refinery utilization rose to 97.2%, signaling strong domestic demand, though this increased activity did not prevent a build-up in U.S. crude inventories, which rose by 4.4 million barrels. The difficulty in accurately measuring total supply reaching refiners due to untracked cargoes and alternate routes contributes to market volatility.

### Risk Watch

The expiration of a temporary ceasefire with Iran and subsequent actions by the UAE, including the suspension of financial transactions, add further geopolitical risk. The market faces uncertainty regarding the exact volume of Middle Eastern exports reaching consumers, creating a challenging environment for sellers to reduce current price premiums.