Oil prices experienced volatility on Friday as investors reacted to a combination of escalating and de-escalating geopolitical developments. Futures for Brent crude, a global pricing benchmark, and West Texas Intermediate (WTI), the U.S. benchmark, each rose approximately 2% from early morning levels, with Brent trading around $104 per barrel and WTI close to $95 per barrel. This followed an earlier surge in prices, which then eased as market participants responded to the fluctuating news.
In a notable turn of events during separate press conferences, U.S. President Trump and Israeli Prime Minister Benjamin Netanyahu announced that both nations would refrain from targeting Iranian energy infrastructure. This decision followed Israeli strikes on Iran’s South Pars gas field, which had provoked a series of retaliatory attacks by Iran.
Despite these diplomatic overtures, hostilities in the region persisted, with Iran continuing its assaults on key energy facilities throughout the Gulf. Of particular concern was the attack on Qatar’s Ras Laffan LNG export terminal, the largest of its kind globally, which occurred earlier in the week. The damage caused by the assault was described as “extensive,” resulting in approximately 17% of Qatar’s LNG capacity going offline. QatarEnergy’s CEO, Saad al-Kaabi, indicated that the situation might compel the company to declare force majeure on shipments for up to five years.
While the paper oil market has shown relative stability over recent days, with Brent and WTI remaining within 1% of their prices at the beginning of the week, the costs of physically delivered oil have surged. According to Bloomberg data, prices for prompt delivery of Dubai and Oman crude were reported at $158.85 per barrel, reflecting a substantial $50 premium over Brent futures. This divergence highlights the growing concerns surrounding physical supply constraints amid ongoing geopolitical tensions in the region.
