WTI Oil rallies above $81 as Middle East tensions threaten global Oil supplies

West Texas Intermediate (WTI) trades around $81.10 at the time of writing on Friday, up 2.76% on the day, and is heading for a weekly gain of more than 13% as geopolitical tensions in the Middle East continue to escalate.

The conflict intensified after the United States (US) launched another wave of strikes against Iranian military facilities. According to the US Central Command (CENTCOM), the operations are intended to further degrade Iran's military capabilities, while US forces continue their operations around the Strait of Hormuz.

In response, the Islamic Revolutionary Guard Corps (IRGC) stated that no Oil or Gas exports will pass through the Strait of Hormuz as long as US strikes continue. The IRGC also warned of stronger retaliation against the United States and countries hosting US military bases. Earlier in the day, Iran also threatened to close the Red Sea, while Qatar said it intercepted a missile attack.

These developments have reinforced concerns over global energy flows. International Energy Agency (IEA) Executive Director Fatih Birol warned that if Oil shipments through the Strait of Hormuz do not resume soon, global energy security could become a major concern.

Commodity analysts at Commerzbank also highlighted that geopolitical risks continue to support the Oil market. The bank said that a potential blockade of the Bab el-Mandeb Strait, another strategic shipping route for regional exports, could push Oil prices even higher. Commerzbank added that Chinese Crude Oil imports could also increase in the coming weeks as cargoes that successfully transited the Strait of Hormuz arrive at Chinese ports.