Oil prices surged on Friday due to heightened concerns over potential supply disruptions in the Strait of Hormuz after Iran unveiled a restrictive draft plan. The plan reportedly includes a ban on U.S. and Israeli ships transiting the vital waterway.
Adding to market jitters, Ukraine struck two Russian oil refineries, and U.S. crude imports from Saudi Arabia hit a historic low. While U.S. President Trump expressed hope for a swift resolution to the conflict, Iran dismissed his comments as “theater diplomacy.”
Oil prices experienced an increase on Friday, fueled by escalating concerns over potential supply disruptions in the critical Strait of Hormuz, following the release of a restrictive draft plan by Iran. The international benchmark, Brent crude for October delivery, saw a gain of 1.25%, reaching $83.52 per barrel. Simultaneously, U.S. West Texas Intermediate (WTI) futures for September advanced by 1.10%, trading at $78.14 per barrel.
This uptick in oil prices signals a potential inflationary pressure from energy costs and the volatile situation in the Middle East, which could also impact currency markets and government bonds, according to a note from Westpac.
A vessel is anchored off the coast of Sharjah in the United Arab Emirates on Aug. 3, 2026. (AFP | Getty Images)
The draft plan, reportedly published by Iran, outlines a ban on U.S. and Israeli ships transiting the Strait. Furthermore, it states that nations perceived to have harmed Iran would be prohibited from transit until compensation is paid.
While reports suggest that Iran and Oman are collaborating on an agreement to define transit routes within the Hormuz Strait, a formal deal has yet to be announced. Current media reports indicate a proposed arrangement where inbound traffic would utilize Iranian waters, while outbound traffic would pass through Omani waters.
Adding to the supply concerns, recent events include Ukraine striking two major Russian oil refineries and a significant drop in U.S. imports of Saudi crude, reaching zero in July for the first time since 1985, according to a note by UOB.
The geopolitical landscape remains complex, with conflicting narratives surrounding diplomatic efforts. U.S. President Donald Trump expressed optimism about an imminent end to the conflict in Iran, stating it would conclude "pretty soon." However, Tehran has characterized his remarks as "theater diplomacy," further muddying the waters regarding potential de-escalation and the future of transit through the Strait of Hormuz.
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