WTI holds firm near $77.50 as escalating Middle East tensions threaten oil supply routes

• WTI steadies as Iranian strikes near Qeshm Island disrupt Strait of Hormuz shipping reopening plans.

• Iran proposes strict Strait restrictions, demanding cargo penalties and excluding US and Israeli vessels.

• Regional energy risks mount following Iranian threats to Gulf infrastructure and Houthi strikes on Saudi positions.

West Texas Intermediate (WTI) oil price remains steady after registering modest gains in the previous day, trading around $77.50 per barrel during the Asian hours on Friday. Crude oil prices hold firm as renewed tensions in the Strait of Hormuz unsettled global markets, casting fresh doubt over efforts to fully reopen the vital shipping route. The latest volatility follows reports that Iran struck what it described as “hostile targets” in the strait after explosions were reported near Qeshm Island.

Tensions are further heightened by a proposed Iran-Oman agreement governing the strategic waterway. Under the draft proposal currently under review by the Iranian parliament, Tehran seeks to prohibit United States (US) and Israeli vessels from transiting the strait and require countries deemed hostile to pay compensation before being granted passage. The proposed framework outlines significantly stricter conditions for commercial shipping than markets had anticipated, including penalties equal to 20% of a vessel’s cargo value for violations, and maintains that the waterway will only fully reopen once the US maritime blockade is lifted.

Simultaneously, Tehran is working to raise the potential cost of military action by threatening Washington's closest regional allies. According to five sources, Iran has explicitly warned neighboring Gulf states that any new US attack on its territory would trigger retaliatory strikes against critical energy infrastructure across the region.

Adding to the regional instability, Yemen's Houthis announced that they carried out missile and drone attacks on Saudi deployments in Marib and Hadramout. The group claimed the strikes killed or wounded hundreds of Saudi-aligned fighters while destroying military camps, weapons depots, and armored vehicles.

Strategists at BNY highlighted that “oil prices have steadied as traders digested Iran’s claim that it had reached an agreement with Oman on a proposed shipping route through the Strait of Hormuz.” They note that the headline has helped calm immediate fears of supply disruption, even as market participants continue to monitor developments in the region closely.