Oil swings as Hormuz deal stalls, weak jobs data lifts prices

Crude oil prices whipsawed this week as fragile negotiations over the Strait of Hormuz lurched between hope and disappointment, leaving both major benchmarks on track for weekly losses of more than 9% after a sharp retreat from recent highs above $90 a barrel.

Brent crude surged nearly 4% on Thursday to settle at $82.49 a barrel after an Iranian parliamentary committee began reviewing legislation that would ban U.S. and Israeli vessels from transiting the strait and impose fines of up to 20% of a ship's cargo value on violators. On Friday, prices oscillated — dipping in early trading before rebounding modestly after the U.S. Bureau of Labor Statistics reported the economy lost 23,000 jobs in July, well below expectations for a gain of about 85,000.news.rthk+3

A Deal Just Out of Reach

The week began with optimism after both Iranian and U.S. officials said an agreement was near. According to the Associated Press, the emerging framework would route ships entering the Persian Gulf through an Iranian-controlled lane and outbound traffic through an Omani-controlled lane, with service fees charged during an initial 60-day period. Reuters reported that Iran is seeking fees of 5% to 7% of cargo values, Oman around 3%, while Washington wants no fees at all.bairdmaritime+1

But the proposed arrangement quickly ran into obstacles. Four industry sources told Reuters the deal's structure is difficult to implement because of U.S. sanctions and restrictive insurance clauses. Bjarne Schieldrop at SEB Research said the agreement "in its current form and the power it yields to Iran is nothing that Trump can accept politically".bairdmaritime

The Iranian parliament's draft bill to exclude American and Israeli ships further dampened expectations. "This situation is just far from settled and you can only give hope so much of a chance, so the market is taking back some of the optimism," said John Kilduff of Again Capital.malaymail

Wider Regional Tensions

Beyond the diplomatic impasse, security threats escalated. A senior Saudi official said the kingdom expected imminent coordinated attacks from Iraqi militias and Yemen's Houthis targeting energy infrastructure, ports, and airports, citing intelligence from Saudi, American, and regional sources. Saudi Arabia, Pakistan, and Turkey signed a joint defense agreement in Mecca on Friday in response to the widening conflict.profit.pakistantoday+1

Meanwhile, the weak U.S. jobs report added another variable. Phil Flynn of Price Futures Group said the data reduced the likelihood of a Federal Reserve rate hike, which supported oil prices on Friday. Fed funds futures had been pricing in roughly 55% odds of a September rate increase.bairdmaritime+2

The Strait of Hormuz normally handles about a fifth of global oil and liquefied natural gas shipments. With no deal finalized and fighting in its sixth month, Vandana Hari of Vanda Insights noted that "the market remains in the dark as to what needs to happen for the agreement to be clinched".wikipedia+1