-- Oil prices were little changed early Friday as the United States and Iran remain deadlocked, leaving the Strait of Hormuz closed and causing the largest even supply shock that is likely to be compounded by the coming start to the high-demand summer driving season.
West Texas Intermediate crude oil for June delivery was last seen down $0.80 to US$104.27 per barrel, while July Brent oil was up $0.57 to US$110.97.
Oil remains in short supply following the closure of the Strait, the chokepoint for exports from the Persian Gulf nations that accounted for 20% of daily demand. The U.S.-Israel war on Iran is now in its third month and neither side is talking to the other. The Guardian reported Pakistan is acting as a back channel to pass messages between the combatants, but little progress has appeared to be made after scheduled negotiations collapsed last weekend.
The lack of supply has pushed up crude oil prices by about half since the Feb.28 start of the war amid shortages of crude oil and refined products, with Nymex gasoline futures up 81% since the war began while supplies of aviation are tightening.
The supply crunch comes ahead of the May 23 start to the Memorial Day weekend, the traditional start of the summer driving season, when demand for fuel peaks, which is likely to push prices even higher.
"With summer demand season quickly approaching, we see a path for oil prices to exceed the 2022 and even 2008 highs, especially as sentiment may finally be shifting on the duration of the Hormuz blockage," Helima Croft, Head of Global Commodity Strategy and MENA Research at RBC Capital Markets, wrote.