By: Economy Middle East

Oil prices extended their gains on Friday as markets remained focused on uncertainty surrounding the reopening of the Strait of Hormuz after Iran proposed barring vessels considered hostile from transiting the waterway and imposing steep fines on ships that breach the suggested regulations.

As of 5:13 GMT, Brent crude futures climbed $1.30, or 1.58 percent, to $83.79 a barrel, while U.S. West Texas Intermediate (WTI) crude gained $1.04, or 1.35 percent, to $78.33 a barrel.

Geopolitical risks remain in focus

The advance in oil prices followed a sharp rally on Thursday, when both benchmarks settled more than $3 a barrel higher after Iran began reviewing legislation that would prohibit U.S. and Israeli vessels from passing through the Strait of Hormuz.

The strategic waterway, through which around one-fifth of global oil and liquefied natural gas shipments flowed before the conflict erupted in late February, remains a key focus for energy markets.

Oil prices had declined earlier in the week as hopes for a resolution to the ongoing conflict improved sentiment. However, benchmark Brent crude climbed back above the $80-a-barrel mark on Thursday after slipping below that level for the first time since July 13.

Despite the rebound, both Brent and WTI remained on track to post weekly losses of around 8 percent.

Analysts said this week’s developments suggest tensions between Iran and the United States remain unresolved, keeping geopolitical risks firmly in focus for energy markets.

Potential Hormuz restrictions deepen supply concerns

An Iranian lawmaker said a parliamentary committee is examining a draft bill that would prohibit U.S., Israeli and other vessels classified as hostile from transiting the Strait of Hormuz, while imposing fines of up to 20 percent of a cargo’s value on ships that violate the proposed rules, according to Iran’s Fars news agency.

According to the senior Iranian official, Tehran is also seeking transit fees of between 5 percent and 7 percent of cargo values for vessels using the strategic waterway. Oman is reportedly discussing fees of about 3 percent, while the United States is pushing for unrestricted passage without any transit charges.

Despite the heightened tensions, U.S. President Donald Trump said on Thursday he believed the conflict would end soon.

Further supporting oil prices, reports of a Ukrainian drone attack that set a major Russian oil refinery on fire added to concerns over potential supply disruptions.

Investors were also awaiting the release of the U.S. nonfarm payrolls report later on Friday for further insight into the Federal Reserve’s monetary policy outlook. Higher interest rates tend to slow economic growth and, in turn, weigh on fuel demand.