Oil prices climbed on Friday and remain positioned for good weekly gains as traders remain focused on rising U.S.-Iran tensions. A risk premium in the oil market remained despite a drop in prices from earlier highs, in part due to worries about slow tanker traffic along the Strait of Hormuz.

Brent crude rose 1.44% to $77.00 per barrel, while West Texas Intermediate (WTI) gained 1.24% to $72.69. Fears that supply disruptions could impact global supply continued to support both benchmark prices.

Strait of Hormuz Remains a Key Market Concern

The Strait of Hormuz is critical to the energy market. Even before the recent war, the narrow waterway carried approximately 20% of the world’s daily oil and gas transport. Any disruption in movement traffic through the region can easily bring up concern with respect to supply and transportation cost.

Shipping companies were evaluating risks in terms of tanker movements through the strait, as recent ship tracking data indicated that there was a sharp drop in activity. Market players are cautious with military operations between the U.S. and Iran and reports of explosions in southern Iran.

Geopolitical Risks Continue to Support Crude Prices

Oil prices retreated slightly from the highs seen in the middle of the week, but investors are still considering geopolitical tensions in the market. Certain concerns were assuaged by the lack of fresh military action, analysts said. Nevertheless, crude prices remain propped up by uncertainty over shipping activity and the stability in the region.

Part of the reason the downside tug does not seem to have as big of an impact is the lack of a direct effect on key oil production and export locations. This has aided in avoiding a bigger supply shock while remaining traders aware of the disruptions that may occur.

IEA Warns of Potential Supply Impact

The International Energy Agency (IEA) has also cautioned against potential impact on future oil supply outlooks if tension returns. Shipping disruptions could further reduce supply options and introduce further pressure to energy markets.

Weekly Gains Highlight Ongoing Supply Concerns

The robust weekly moves signal the severity of the situation and how traders are correctly respecting it. Brent crude is poised to benefit from a weekly gain of around 6%, and WTI is headed for around a 5% weekly increase.

In the future, the rate of shipping through the Strait of Hormuz will be a prime concern for investors. The disruption to tanker movements may cause the oil prices to remain high. The price of energy could also contribute to higher fuel prices and liability for worldwide inflation fears for consumers and businesses.