Crude markets remained on edge as uncertainty over the future of the Strait of Hormuz overshadowed President Trump's assertion that a deal with Iran could soon restore normal shipping through the strategic waterway, RBC Capital Markets strategists said in a note on Friday.
RBC analysts said that the latest flare-up in tensions marked the most significant military action since a US-Iran ceasefire took effect earlier this year.
US strikes on Iranian targets on Thursday were followed by Trump's warning that Washington was prepared to hit Iran "very hard" again and could move against the country's oil infrastructure, including the Kharg Island crude export terminal.
The US President later softened his stance, saying that regional allies and Iran had broadly agreed to a framework that could lead to the reopening of the Strait of Hormuz in the coming days. However, conflicting reports from Iranian and Israeli media outlets raised questions about the status of any agreement.
RBC analysts said discussions in the US this week suggested little appetite within the Trump administration for concessions to Tehran, particularly regarding the Strait, through which about a fifth of global oil consumption passes.
Iran would not exercise any control rights over the Strait of Hormuz at the conclusion of the conflict or receive compensation for allowing transit through the waterway, the analysts said in a note summarizing discussions with US officials and Gulf regional leaders.
RBC said that efforts to permanently weaken the influence of Iran's Islamic Revolutionary Guard over the strategic waterway could require deeper military involvement. Though US air support has reportedly enabled more vessels to transit the waterway, the reliance on military escorts has increased the risk of direct confrontation.
The risks were highlighted earlier this week when a US Apache helicopter was shot down in the Gulf, an incident that RBC analysts said came close to triggering a broader resumption of hostilities.
There is nothing to indicate that Iran is willing to relinquish its control of the Strait at the negotiating table, analysts said, adding that Tehran may view influence over the waterway as a more important deterrent asset than its nuclear program.
Meanwhile, executives and analysts attending RBC's Global Energy Forum pointed to growing concerns over energy security and tightening inventories amid the geopolitical uncertainty.
RBC said industry participants said public crude producers remained reluctant to increase output despite higher prices, citing uncertainty over the duration of the conflict and broader market conditions. Private operators, however, were viewed as more willing to expand drilling activity.
The bank said inventories emerged as a central concern, with speakers at the forum saying that both strategic and commercial crude stocks were being drawn down rapidly.
US Strategic Petroleum Reserve could face operational constraints as inventories approach about 300 million barrels, RBC analysts said, a level often viewed as the practical lower limit for the system.
Commercial crude inventories, including stocks at the Cushing, Oklahoma delivery hub, have also dropped significantly, potentially limiting the US's ability to continue using exports to ease global supply imbalances.