Crude oil prices rose on Friday afternoon after reports that the US would deploy additional troops to the Middle East heightened concerns that the conflict may be far from over.
Brent crude (BZ=F) futures rose 2% to $106 a barrel, while West Texas Intermediate (CL=F) climbed 1.3% to $96.82 at the time of writing.
Prices remain well below Thursday’s peak of $119, though still almost 50% higher than before the conflict began.
According to Reuters, the US military is sending thousands of additional marines and sailors to the region, citing three US officials. “One of the officials, speaking on the condition of anonymity, said that the USS Boxer, along with the Marine Expeditionary Unit aboard, were departing the West Coast of the United States about 3 weeks ahead of schedule,” it reported.
Oil benchmarks had earlier pared gains as political leaders signalled the need for restraint and de-escalation, said Priyanka Sachdeva, senior market analyst at Phillip Nova. She added that markets remained highly sensitive to potential disruption risks around the Strait of Hormuz.
Read more: Top oil and energy stocks to watch as crude swings wildly amid Iran war
“The damage has been inflicted, and even if safe passage for tankers is somehow negotiated through Hormuz, reviving logistics fully fledged can take an awfully long time,” Sachdeva said.
“Till then, any direct hit on export infrastructure or tanker routes could push prices sharply higher, while sustained diplomatic engagement may cap rallies and accelerate the unwinding of the war premium.”
In a joint statement on Thursday, Britain, France, Germany, Italy, the Netherlands and Japan expressed “our readiness to contribute to appropriate efforts to ensure safe passage through the Strait”, a route that carries about 20% of global oil and liquefied natural gas flows.
Separately, the International Energy Agency urged people to work from home as the conflict deepens a global energy crisis. The agency said commuting should be limited where possible as the worldwide energy shock becomes “more and more severe”.
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