Oil prices climb as fears grow over Hormuz Strait reopening
Photo: Oil prices are rising due to concerns over the opening of the Strait of Hormuz (Getty Images)
On Friday, August 7, oil prices continued to rise amid concerns about the resumption of full-scale shipping through the Strait of Hormuz, according to Reuters.
Brent crude oil futures rose by 80 cents (0.97%) to $83.29 per barrel.
US West Texas Intermediate (WTI) crude oil futures rose by 64 cents (0.83%) to $77.93 per barrel.
Yesterday, oil futures closed up more than $3 per barrel amid Iran's consideration of a bill to ban US and Israeli ships from passing through the Strait of Hormuz.
Prices fell at the start of the week as the likelihood of a possible resolution to the ongoing conflict increased, but on Thursday, the price of Brent crude surpassed the $80 mark after dipping below that level for the first time since July 13.
Both benchmark oil grades were heading for a weekly decline of about 8%.
According to analysts, the events that unfolded this week indicate that hostilities between Iran and the US are not yet over.
Oil prices are reacting to a draft plan released by Iran regarding transit conditions through the Strait of Hormuz, which bans the passage of US and Israeli ships and requires other hostile countries to pay compensation before passing through.
The Fars news agency, citing an Iranian lawmaker, reported that the draft plan calls for imposing fines on violators of the proposed restrictions amounting to up to 20% of the cargo's value.
According to a high-ranking Iranian official, Iran is demanding that ships passing through the strait pay a fee ranging from 5% to 7% of the cargo's value. Oman is discussing the possibility of imposing a fee of about 3%, while Washington advocates for a complete waiver of fees.
Four industry sources noted that the proposed agreement is difficult to implement due to US sanctions and restrictive insurance terms regarding any payments.
Iran-Oman agreements
An agreement between Iran and Oman would give Tehran control over ships entering the Persian Gulf through the Strait of Hormuz.
The US and Iran are one step away from a peace agreement if they agree on control of the Strait of Hormuz.
In addition, US President Donald Trump stated that negotiations with Iran were progressing rapidly. He also announced the full restoration of normal shipping traffic in the Strait of Hormuz.
On August 5, it was reported that an agreement between Iran and Oman regarding shipping in the Strait of Hormuz was almost finalized.
