Key Takeaways
- Brent crude reached $109.97 per barrel during the week—the highest price point since early May—before moderating to approximately $107.86
- Maritime confrontations between U.S. and Iranian forces near the Strait of Hormuz intensified significantly
- Diplomatic discussions between Iran and Gulf nations scheduled for Monday in Oman could address Hormuz shipping arrangements
- Houthi forces captured Mokha, a strategic Red Sea port, strengthening their control over critical shipping lanes
- Weekly gains exceeded 11% for both Brent and WTI contracts, marking the strongest performance since mid-July
Oil prices experienced significant turbulence throughout the week, oscillating between substantial increases and a Friday retreat following reports suggesting Iran and Gulf nations might be approaching an agreement on Hormuz waterway navigation.
Brent crude peaked at $109.97 per barrel, marking its strongest position since the beginning of May. West Texas Intermediate similarly exceeded $103 during the week. Both contracts recorded weekly increases ranging from 11% to 13%, representing the most substantial weekly advancement since the middle of July.
By the close of trading Friday, Brent had retreated to approximately $107.86 while WTI settled at $102.28, following Financial Times coverage indicating that foreign ministers from Gulf countries intend to convene with Iran’s senior diplomat Monday in Salalah, Oman.
This gathering represents an Omani diplomatic initiative and would constitute the inaugural direct negotiations between Gulf and Iranian representatives since the U.S.-Israeli military campaign against Iran commenced in late February. Both Iran and Oman had previously indicated in August that preliminary discussions regarding a commercial maritime agreement for Hormuz were underway.
Washington has predominantly resisted such arrangements and has previously cautioned Gulf nations against entering negotiations with Iran. The United States has continued enforcing its naval blockade against Iran throughout the ongoing conflict.
Maritime Confrontations Push Markets Upward
During the week’s early sessions, crude oil prices surged beyond $100 per barrel following Iranian announcements of attacks on 10 vessels in proximity to the Strait of Hormuz. U.S. authorities reported retaliatory measures resulting in the destruction of five Iranian tankers. This exchange represented one of the most severe confrontations in recent months.
Commodity strategists at ING noted in their analysis that oil markets are “repricing both the duration and severity of the conflict,” emphasizing that transit volumes through the Strait of Hormuz continue operating “well below pre-war levels.”
According to IG analyst Tony Sycamore, Iran’s demonstrated willingness to prolong the confrontation suggests an increasing probability that WTI crude will challenge its early March peak of $119.48.
Red Sea Control Expands Under Houthi Forces
Compounding supply anxieties, Houthi forces from Yemen established control over Mokha, a critical Red Sea port city. The United Nations Special Envoy for Yemen informed the Security Council this week that this development provides the Houthis with “a direct presence on the approaches to one of the world’s most vital straits.”
The Houthi movement has instituted a maritime blockade targeting Saudi Arabia and has conducted multiple attacks on vessels transiting the Bab el-Mandeb Strait. Friday reports indicated the group targeted Saudi Arabia’s East-West petroleum pipeline, with six significant fires documented at the installation.
The Bab el-Mandeb Strait represents another critical corridor for international oil transportation. Interruptions in this region, combined with diminished throughput via Hormuz, compound stress on crude petroleum markets.
President Donald Trump has expressed expectations for the conflict’s conclusion following November’s midterm elections. Nevertheless, reporting from the Wall Street Journal suggests senior White House advisers anticipate the confrontation could persist into early 2029.
Monday’s diplomatic session in Oman will receive intense scrutiny from commodity traders as a potentially significant initial measure toward reducing tensions throughout the Gulf region.
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