Oil prices: WTI, Brent, Saudi pipeline attack, Middle East war

Crude oil prices fell below the $100 mark on Friday as tensions persisted around the Strait of Hormuz, with vital shipping lanes still largely closed despite a cease-fire agreement between the United States and Iran.

US West Texas Intermediate crude oil futures for May delivery rose 0.8% to $98.62 per barrel after exceeding $100 in early trading. International benchmark Brent crude oil futures for June delivery rose 1% to $96.85 per barrel.

President Donald Trump has warned Iran to “stop now” if it attacks tankers passing through the strait, a move that risks undermining a two-week cease-fire agreement conditioned on reopening the waterway. He stepped up his aggressive rhetoric on Friday.

“The Iranians don’t seem to realize that they have no cards in their hands other than short-term global heist using international waterways,” he said in a post on Truth Social. “The only reason they are alive today is to negotiate!”

Transport through the chokepoint, which handled about 20% of the world’s oil supply before the war, remains severely restricted and the market is under stress. Most of the ships that passed through the strait in the past day were linked to Iran, according to reports on Friday.

“Iran has done a disgraceful, some may say, disgraceful job of allowing oil to pass through the Strait of Hormuz,” Trump said in a post on Truth Social.

Trump’s chief economic adviser, Kevin Hassett, said Thursday that getting just one oil tanker through the strait would provide “a huge chunk of what’s missing.”

Adrian Besiri, CEO of DUCAT Maritime, a Cyprus-based logistics company specializing in dry bulk, said the Strait of Hormuz remained effectively closed and the behavior of ship owners and operators was “exactly the same today” as it was at the peak of the conflict.

“Frankly, the situation is very chaotic. There is no known way to get through the Strait of Hormuz, there is no established way. There is not even a clear way to communicate to the Iranian side about how to do it, and it seems to be the only way at the moment,” Besiri told CNBC’s “Europe Early Edition” on Friday.

“The small number of vessels we have are taking a different route, closer to the Iranian coastline, and the amounts we are hearing from owners off the record are frankly ridiculous,” he added.

Additionally, attacks on Saudi Arabia’s energy infrastructure are impacting oil production capacity.

The strike has cut crude oil production capacity by about 600,000 barrels per day, and the flow through the East-West pipeline by about 700,000 barrels per day, the Saudi Press Agency reported, citing Energy Ministry officials.

Iranian airstrikes hit pumping stations along the East-West pipeline, state news agencies reported. The pipeline will transport crude oil from processing facilities near the Persian Gulf to the Red Sea export terminal in Yanbu.

Riyadh has relied heavily on pipelines as its main export route during the conflict, as Iranian attacks have made shipping through the Strait of Hormuz increasingly impossible.

Meanwhile, separate attacks on Saudi Arabia’s Manifa and Khurais oil fields have reduced Saudi production by about 600,000 barrels per day, the Saudi Press Agency reported. Several refineries have also been targeted in recent strikes, further compounding supply disruptions.

The United States reached a two-week cease-fire agreement with Iran on Tuesday, in exchange for which Iran will allow ships to pass through the strait. The chief executive of the UAE’s national oil company said on Thursday that the waterway remained largely blocked to transport.

With Gulf imports below 2 million barrels a day and sailing times stretching into weeks, buyers may need to rely on stockpiles and alternative supplies for at least another month, even as rising fuel prices begin to weigh on demand, Goldman analysts said.

—CNBC’s Justina Lee and Spencer Kimball contributed to this report.