Oil Prices Rise as Iran Releases Draft Strait of Hormuz Transit Plan

Brent crude rose 3.6% to $82.36 a barrel and U.S. West Texas Intermediate gained about 2.8% to $77.30 following the release of a draft transit plan by Iran's state news agency Fars. The draft, which is being examined by an Iranian parliamentary committee, proposes that U.S. and Israeli vessels be barred from the strait and that ships from countries deemed hostile to Iran could only transit after compensation is paid. Violations would be penalised at a rate of 20% of the cargo's value.

The market had earlier fallen about 8% during the week after Treasury Secretary Scott Bessent indicated that a deal to ensure free movement through Hormuz might be reached soon. While no formal agreement has been announced, reports say Iran and Oman are negotiating a framework that would route inbound traffic through Iranian waters and outbound traffic through Omani waters.

Separately, Iran's Houthi allies in Yemen said they had attacked Saudi troop positions and a Saudi tanker in the Red Sea near the Yanbu export terminal. The United Kingdom Maritime Trade Operations Centre reported that a tanker heard two explosions while transiting the strait off Oman, though the vessel and crew were reported safe.