Oil climbed over 1% as unworkable Hormuz transit fees stall diplomatic breakthrough

Global crude benchmarks advanced more than 1% on Friday as structurally unviable transit fee proposals in Oman-brokered negotiations stalled diplomatic efforts to reopen the Strait of Hormuz, cementing geopolitical risk premiums.

International Brent crude settled up $1.06, or 1.3%, at $83.55 a barrel. US West Texas Intermediate (WTI) gained 89 cents, or 1.15%, to finish at $78.18 a barrel.

Despite Friday's gains, extreme intra-week volatility driven by on-again, off-again peace signals left Brent with a steep weekly loss of more than 8% and WTI down over 7%.

Pricing direction was firmly dictated by the realisation that proposed transit agreements remain unworkable under current market constraints. Negotiations have gridlocked over a tariff framework, with Iran demanding 5% to 7% of cargo value for safe passage, whilst Oman suggests a 3% levy. Washington has categorically rejected any fee implementation, as the proposed structure yields leverage to Tehran that US President Donald Trump cannot accept politically.

Furthermore, industry sources noted that US sanctions and restrictive marine insurance clauses render any payment mechanics legally and financially impossible, extinguishing near-term hopes of restoring a maritime chokepoint that historically handles a fifth of global hydrocarbon flows.

Upside momentum was reinforced by sustained legislative hostility in Tehran, as traders priced in a newly reviewed parliamentary bill aimed at formally banning US and Israeli vessels from the strait. With physical export channels remaining paralysed in the sixth month of the conflict, the protracted disruption continues to force a sustained drawdown of global commercial reserves.

Written by: Aiman Haikal