Global oil prices are on track for a massive 16% weekly gain as a tanker traffic jam in the Strait of Hormuz threatens to choke off supply from the Middle East.
Brent crude hit $84.66 a barrel on Friday, while US benchmark WTI traded at $79.94. The surge comes despite a Thursday dip after the US stepped in to calm the market.
The US move
The Treasury Department issued a 30-day sanctions waiver allowing trading firms to sell roughly 9.5 million barrels of stranded Russian oil to India, according to Bloomberg. The goal is to plug the gap left by halted Middle Eastern shipments.
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The crisis
The disruption in the Strait of Hormuz—a passage for 20 million barrels daily—is creating a logistical nightmare:
- Iraq has already slashed output by 1.5 million barrels per day due to a lack of storage.
- Kuwait could be forced to cut within two weeks if traffic doesn’t resume.
- Storage issues are mounting as tankers sit idle.
“The only way for prices to come down is a resumption of flows through Hormuz,” said ING commodity analysts, downplaying the impact of the US waiver. “This is not a game-changer.”
Analysts warn that unless the strait reopens soon, halted loadings will drive energy prices even higher.
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