-- Crude oil futures edged higher in midday trading on Friday as heightened tensions between the US and Iran and Iranian missile attacks on the UAE stoked concerns over potential supply disruptions in the Middle East.
Front-month West Texas Intermediate crude futures gained 0.78% to $95.55 per barrel, while Brent futures were up 1.06% to $101.12/bbl.
The UAE Defense Ministry said Friday its air defenses engaged two ballistic missiles and three drones launched from Iran, the third time this week that it has fired on the UAE.
The US and Iranian naval forces exchanged fire in the Strait of Hormuz on Thursday, with each side claiming the other initiated the attack.
On Friday, US naval forces fired on and disabled two Iranian oil tankers, M/T Sea Star III and M/T Sevda, that violated Washington's blockade of Iranian ports. "US Central Command enforced blockade measures against two Iranian-flagged unladen oil tankers attempting to pull into an Iranian port on the Gulf of Oman," Centcom said in a statement on X.
The attack is the latest after US and Iranian forces traded attacks in the Hormuz overnight. "The Strait of Hormuz remains effectively closed, with renewed clashes between US and Iranian forces lowering the prospect of a near-term reopening," Saxo Bank strategists said, adding that the International Energy Agency estimates regional supply losses at about 14 million barrels per day.
Speaking at a policy conference in Toronto, Canada, Fatih Birol, the IEA's executive director, said on Thursday that the agency was prepared to take further action after members agreed in March to release 400 million barrels of crude.
Meanwhile, global oil markets' focus remains on the Hormuz, which has been effectively closed since the outbreak of the Middle East conflict in February.
Iran's Islamic Revolutionary Guard said it seized the "offending" oil tanker, Ocean Koi, in the Gulf of Oman for maritime violations and attempting to disrupt the country's oil exports.
"During a special operation, naval commandos of the Islamic Republic of Iran's Army detained the violating oil tanker Ocean Koi," an Iranian Navy statement was quoted by local media, adding that the vessel was "attempting to disrupt oil exports and the interests of the Iranian nation."
The US expects an Iranian response to its latest proposal to end the conflict by the end of the day on Friday.
President Trump reportedly insisted the ceasefire with Iran remained in effect despite the clashes in the Hormuz, calling the exchange of fire "just a love tap." US Secretary of State Marco Rubio also told reporters in Rome that Washington is expecting "something today."
"We still believe that, given a live-fire exchange in the world's most important oil choke point, the current price action is surprisingly muted," Ole R. Hvalbye, commodities analyst at SEB Research, said in a note Friday.