Oil Prices Spike as Middle East Tensions Grip Global Markets $98 Per Barrel

Synopsis: Oil prices spike above $98/bbl (WTI) amid Middle East tensions: Hormuz blockade traps 10M bpd, Saudi strikes cut 600K bpd output, despite US-Iran truce and Netanyahu caveats.

Oil markets are on edge. A wave of military strikes and a blocked sea route have sent crude prices surging even as a fragile ceasefire tries to hold the Middle East together.

WTI crude futures climbed above $98 per barrel on Friday. Despite the spike, prices remain on track to fall more than 10% for the week. The drop follows a US-Iran agreement on a two-week ceasefire. North Sea Forties Blend a key physical crude hit a record $147 per barrel on Thursday. That is $50 above Brent futures, which traded near $97 a barrel.

Israeli Prime Minister Benjamin Netanyahu said clearly that strikes in Lebanon are separate from the US-Iran truce. Washington, however, has scheduled talks next week with both Israel and Lebanon. Those talks aim to expand the ceasefire negotiations further. The diplomatic window remains open but it is narrow.

The Strait of Hormuz has not reopened. Iran still controls who passes through. Ship movement is limited to about a dozen vessels per day not all of them tankers. Around 10 million barrels per day of crude remain trapped. Buyers cannot reach Middle East suppliers. As a result, they are turning to crude from elsewhere. Prices for those alternatives are now breaking records. US President Donald Trump warned Iran over imposing transit fees in Hormuz. He also criticised its handling of oil flows through the critical waterway.

Saudi Arabia confirmed attacks on its energy facilities. Those strikes cut its oil production capacity by roughly 600,000 barrels per day. Meanwhile, a major pipeline built to bypass the Strait of Hormuz was also struck. The situation worsens the supply shock already hitting global markets.

The $50 gap between spot prices and futures tells a clear story. The market is not worried about long-term oil supply. It is worried about getting oil right now. Ole Hansen, Head of Commodity Strategy at Saxo Bank, noted the divergence “reinforces the message seen across the forward curve.” He added the issue is not long-term availability, but near-term accessibility. Analysts expect physical crude prices to stay elevated. The Strait of Hormuz must first fully reopen before that changes.

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