Key Highlights

  • WTI crude held above $72 a barrel, on track for a roughly 5% weekly gain.
  • Tanker traffic through the Strait of Hormuz remains well below normal levels despite talks continuing.
  • The UAE's record crude output is helping offset supply fears from the Gulf.

Crude oil prices steadied above $72 a barrel on Friday, keeping the market on course for a weekly advance of nearly 5%, as renewed military exchanges between the United States and Iran kept a lid on any recovery in tanker traffic through the Strait of Hormuz. The world's busiest oil chokepoint has seen shipping volumes stay markedly below pre-conflict norms, even as diplomatic channels between Washington and Tehran reportedly remain open.

Traders are effectively pricing two competing narratives at once. On one hand, the latest round of strikes has raised the risk premium embedded in benchmark prices, with vessel-tracking data confirming that shippers are routing tankers with unusual caution or delaying transits altogether. On the other, officials from both countries have signalled that technical-level negotiations toward a more durable arrangement have not been abandoned, tempering fears of an all-out escalation that would threaten a fifth of global oil and gas flows.

The International Energy Agency added a note of caution to the outlook, warning that a drawn-out conflict could complicate the rebuilding of global oil inventories later in the year — a task made more urgent by supply losses already sustained during the current standoff. Stock levels had been expected to recover through the second half of 2026 as new production came online, a plan now under pressure from the Gulf disruption.

Offsetting some of that risk, the United Arab Emirates pushed crude production to a record high last month, underscoring how Gulf producers with spare capacity are moving to backstop supply even as the security situation around Hormuz deteriorates. That response has helped prevent prices from spiking further, even as freight and insurance costs for tankers transiting the strait have risen sharply.

For now, the market's base case appears to be a contained conflict rather than a full closure of Hormuz — a scenario few insurers or shipping lines are willing to price as their central assumption. But with roughly 20 million barrels a day of oil and LNG passing through the strait, any material deterioration in the security backdrop would quickly override the calming effect of higher Gulf output.