Oil price jumps over 4% to $88.1

Oil prices climbed more than 4 percent to their highest in more than a month on Friday. This came after the US and Iran stepped up attacks across the Gulf. Shipping was also threatened by a potential Red Sea closure.

This was on top of the restricted traffic through the Strait of Hormuz. Brent crude futures settled 3.87 dollars, or 4.59 percent, higher to 88.10 dollars a barrel. US West Texas Intermediate futures rose 3.54 dollars, or 4.48 percent, at 82.49 dollars.

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Both benchmarks were at their highest since mid-June. For the week, both benchmarks gained about 16 percent. Brent was on track for a third consecutive weekly gain. WTI was set for its second weekly gain.

The two foes expanded fighting on Friday. The US struck bridges and an airport in Iran. Tehran hit a power and desalination plant in Kuwait. Iran said it launched more strikes on US facilities in the Middle East.

This included the first direct attack in Syria. This followed a sixth straight night of US strikes on Iranian military facilities. Andrew Lipow, president of Lipow Oil Associates, commented on the situation.

He said the market is reacting to increasing hostilities between Iran and the United States. These culminated this week with nightly attacks on Iranian infrastructure and retaliation by Iran on its neighbours’ infrastructure.

He added that if more tankers come under fire and become damaged, oil prices will continue to move up. This is because shipowners will simply refuse to enter the Persian Gulf.

The collapsed truce between the US and Iran has resulted in a sharp decline in oil flows in the strait. This happened as Iran targets vessels transiting through it.

Before the Iran war, about 20 percent of global oil supplies flowed through the waterway. Iran has pressed the Houthis to close the Red Sea route if the US attacks Iran’s power infrastructure.

Tamas Varga, analyst at PVM Oil Associates, wrote in a note that any such development is a threat indeed. This is given that so much of Saudi Arabia’s exports have been redirected to the port of Yanbu.

These exports go via the East-West Pipeline to avoid Hormuz. Saudi Arabia has diverted more than 70 percent of its normal daily crude exports to the Red Sea port of Yanbu since the beginning of the war.

Shipments from Yanbu averaged 4 million barrels per day in recent weeks. This is up from around 973,000 bpd in the same period last year. Qatar’s defence ministry said its armed forces thwarted an Iranian missile attack early on Friday.

The interior ministry said a child was wounded by shrapnel resulting from interception operations. In a different conflict zone, Ukraine’s military said it struck a Russian oil refinery in the Yaroslavl region on Thursday.