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US Oil Update: Oil Benchmarks Rebound Amid Middle East Escalation

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Crude oil benchmarks gained on Friday following attacks on tankers in the Strait of Hormuz, intensifying supply concerns in the global market.

Front-month West Texas Intermediate crude futures rose 2.7% to $85.74 per barrel, while Brent futures were up 1.5% to $90.33/bbl.

Both contracts were nonetheless headed for their first weekly loss after three consecutive week of gains.

Supply concerns intensified after two oil tankers were struck and forced to halt by Iran's Islamic Revolution Guards Corps in the Strait of Hormuz early Friday for allegedly attempting to exit the vital waterway through an unauthorized route, Iran's Tasnim news agency reported, citing an IRGC statement.

"There were also signs that the market has avoided the worst-case scenario of a complete halt to oil flowing through the Bab al-Mandeb Strait in the Red Sea following attacks by the Iranian-backed Houthi militant group on oil tankers," ANZ analysts said.

"Traffic has only halved compared to normal levels, despite the group announcing a blockade of vessels utilising Saudi Arabian ports. This comes despite conflict between the US and Iran continuing," ANZ said.

This follows a Thursday meeting where the Saudi defense ministry reported over 40 nations convened to discuss strengthening maritime defense cooperation to secure critical sea lanes, responding to Houthi embargo declarations and persistent Iranian attacks.

Physical supply disruptions further fueled volatility in energy markets.

Global middle distillate margins climbed to fresh highs after renewed Middle East conflicts tightened diesel availability heading into winter, according to Vortexa analyst Pamela Munger.

Simultaneously, the Caspian Pipeline Consortium suspended oil loading at its Black Sea export terminal on Thursday following Ukrainian drone strikes that targeted a vessel loading at the facility.

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