HOUSTON, March 7 — United States (US) crude futures climbed 12 per cent on Friday due to disruptions to global oil supplies because of the expanding US-Israeli war with Iran.
Brent crude futures settled at US$92.69 a barrel, up US$7.28, or 8.52 per cent. West Texas Intermediate crude (WTI) finished at US$90.90 a barrel, up US$9.89, or 12.21 per cent.
In one week, WTI rose 35.63 per cent, and Brent climbed 27 per cent, the biggest weekly gains since the COVID-19 pandemic in the spring of 2020.
For the second consecutive day, US crude futures rose more than Brent futures as refiners worldwide scrambled to buy alternative crude to plug the gap left by the disruption to Middle East supplies.
"Refiners and trading houses are searching for alternative barrels, and the US is the largest producer," said UBS analyst Giovanni Staunovo.
Rystad Energy vice president of oil analytics Janiv Shah said that several factors contributed to the divergence in gains between WTI and Brent on Friday.
High refinery production due to favourable margins and strong arbs to Europe drove the split between the two contracts.
Crude over US$100 a barrel?
In an interview with The Financial Times on Friday, Qatar's Energy Minister Saad Sherida al-Kaabi said he expects all Gulf energy producers to shut down exports within weeks, which he said could drive oil to US$150 a barrel.
"The worst-case scenario is developing before our eyes. I think the forecasts of US$100 a barrel are all to come true," said Again Capital partner John Kilduff.
Oil started its steep rally after the US and Israel launched strikes on Iran on Saturday, prompting Iran to stop tankers moving through the Strait of Hormuz.
Oil supply equal to about 20 per cent of world demand usually passes through this waterway each day. With the Strait now effectively closed for seven days, about 140 million barrels of oil — equivalent to about 1.4 days of global demand — have been unable to reach the market.
The conflict has spread across the Middle East's key energy-producing areas, disrupting output and forcing refinery and liquefied natural gas plant shutdowns.
"Every day the Strait stays closed, prices will go higher. The belief in the market was that Trump might pull back at some point because he does not want to have high oil prices, but the longer that takes, the clearer it is how much is at risk," said Staunovo.
In an interview with Reuters on Thursday, US President Donald Trump said that he was not concerned about rising US gasoline prices linked to the conflict, saying, "if they rise, they rise."
The possibility that the US Treasury Department might take action to combat rising energy costs briefly pushed prices down by more than one per cent early on Friday.
On Thursday, it granted waivers for companies to buy sanctioned Russian oil. The first waivers went to Indian refiners, who have since bought millions of barrels of Russian crude.
