Oil Prices Surge on Saudi Strikes, Amid Frozen Hormuz Strait Fueling Global Anxiety

Impact of Geopolitical Tensions on Crude Oil Futures​

Oil markets experienced a sharp rally on Friday, driven by fresh anxieties surrounding oil supplies from Saudi Arabia. Tensions were further amplified by the near standstill of tanker traffic through the critical Strait of Hormuz. Brent crude futures added 96 cents, marking a 1% increase to $96.88 a barrel by 0604 GMT. West Texas Intermediate futures also rose, gaining 78 cents, or 0.80%, reaching $98.65 a barrel.

Despite the upward momentum, nerves eased slightly over a fragile two-week ceasefire between the U.S. and Iran. Additionally, Israel indicated a potential diplomatic breakthrough, confirming its readiness to commence direct talks with Lebanon as soon as possible. Nevertheless, the primary market focus remained squarely on supply constraints.

Disruptions Reported Across Saudi Energy Infrastructure​

Concerns over ongoing oil supply disruptions were significantly heightened following a report on Thursday. The Saudi state news agency SPA cited an official from the Ministry of Energy, detailing that recent attacks on Saudi energy facilities have curtailed the kingdom's oil production capacity by roughly 600,000 barrels per day. Furthermore, throughput on the East-West Pipeline was reportedly cut by about 700,000 bpd.

These infrastructure damages have had widespread implications for global energy flow. JPMorgan estimates that over the last six weeks, approximately 50 infrastructure assets in the Gulf have sustained damage from drone and missile strikes. Moreover, an estimated 2.4 million bpd of oil refining capacity has been taken offline.

The Critical Pinch: Strait of Hormuz Traffic Freeze​

The commercial flow of oil remains severely constrained, with ship traffic through the Strait of Hormuz standing at well below 10% of normal volumes on Thursday. This low movement persisted despite the two-week ceasefire brokered by Pakistan between Iran and the U.S. On the ground, Tehran asserted its control by warning vessels to remain within its territorial waters while maintaining these restrictions.

Analysts suggest that Pakistan may face challenges in pushing for a more durable peace agreement. The strategic waterway has been effectively curtailed since the conflict began on February 28, following air strikes launched by the U.S. and Israel on Iran.

Expert Outlooks on Price Trajectories and De-escalation​

Energy consultants suggest that the trajectory of oil prices remains highly sensitive to Strait activity. John Paisie, president of Stratas Advisors, noted that Brent prices could ascend to $190 a barrel if current flow levels through the Strait of Hormuz persist.

However, Paisie tempered expectations by suggesting that if Iran allows increasing flows, the price of oil would be more moderated, although still anticipated to trade significantly above pre-war levels. Mukesh Sahdev, founder & CEO of XAnalysts, highlighted that the "key variable now is how flows through the Strait of Hormuz actually resume - not whether they reopen."

Market Resilience Amid Ongoing Political Negotiations​

While geopolitical uncertainty drives immediate price action, diplomatic efforts continue to shape the backdrop. Iran’s desire to charge fees for ships transiting the strait under any peace deal was opposed by both Western leaders and the U.N.’s shipping agency. For this week, oil contracts have shown signs of weakness, having lost approximately 11% so far, marking the biggest weekly decline since June 2025, the period before previous Israeli-U.S. strikes on Iran were halted.