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EMEA Oil Update: Crude Rally as US-Iran Conflict Spreads to Red Sea

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Oil futures gained over 3% on Friday as intensifying US-Iran military strikes continued to threaten critical energy transit routes raising supply fears in a market already struggling for energy supplies.

Front-month Murban crude futures surged 3.5% to $80.46 per barrel with the contract adding more than 13% on a week-over-week basis. Brent futures gained 3.1% to $86.84/bb and rose more than 14% so far this week.

Markets are grappling with restricted flows through the Strait of Hormuz and potential closures in the Red Sea, analysts noted.

US Central Command reported that its forces have engaged in six consecutive nights of strikes aimed at degrading Iranian military capabilities, while Iran has responded by targeting US military sites in Bahrain, Jordan, and Kuwait.

"At the Commander in Chief's direction, [CENTCOM] is further degrading Iranian military capabilities and holding Iran accountable for recent attacks on commercial shipping," US Centcom posted on X.

"The exchange of attacks has raised concerns about supplies, with rising energy prices as observable commercial traffic through the Strait of Hormuz slumps," Saxo Bank analysts said.

The security landscape for energy infrastructure has deteriorated sharply, most notably in Iraq.

UAE-based Dana Gas the publicly traded operator of the Khor Mor gas field, confirmed the suspension of its main production facilities due to credible security threats.

"Dana Gas (PJSC) informs the market that due to credible security threats and the escalation in the region, Khor Mor main production facilities are being shut down," the company noted.

Iran has reportedly directed Houthi proxies in Yemen to prepare for potential operations against Red Sea shipping routes should the US extend its military campaign to Iranian energy infrastructure.

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