Oil Prices Edge Higher Amid Gulf Tensions, Bakken Discount Holds

Oil prices posted modest gains in midday trading Saturday, supported by renewed geopolitical tensions in the Persian Gulf that threaten a fragile ceasefire. West Texas Intermediate (WTI) crude traded at $95.42 per barrel, up $0.61 (0.64%), while the global benchmark Brent crude rose to $101.29, a gain of $1.23 (1.23%), according to live price data.

The price movement follows a volatile week where Brent crude still notched a weekly drop of about 6%, Rigzone reported. The market's focus remains fixed on the Strait of Hormuz, a vital shipping chokepoint that has been effectively closed since the US-Iran war began in late February, triggering an unprecedented supply shock.

Fresh clashes are dimming hopes for a swift peace deal. According to Rigzone, Iran criticized the US on Friday for violating a ceasefire agreement, and US forces conducted airstrikes on Iranian oil tankers and launch sites. "Control of the Strait of Hormuz has emerged as Iran's strongest bargaining chip," analysts from Societe Generale SA noted.

"Oil is trading between two risks: diplomacy on one side and another escalation on the other," said Charu Chanana of Saxo Markets. Prices fluctuated in a roughly $10 range this week as expectations for a resolution shifted rapidly.

For Bakken operators, the key local price marker, the Bakken differential to WTI, held steady at -$3.42 per barrel. This means Bakken crude is priced at approximately $92.00 per barrel at the wellhead, factoring in the discount for transportation and quality relative to the US benchmark. Sustained high global prices driven by geopolitical risk provide a favorable revenue environment, though the ongoing closure of the Strait of Hormuz maintains a backdrop of extreme market volatility and global supply uncertainty.

The regional tensions have overshadowed other conflicts, with crude prices briefly dipping Friday after an announcement of a ceasefire between Russia and Ukraine, Rigzone reported. The broader context includes spiking retail fuel prices and record-low US consumer sentiment due to inflation concerns.

Natural gas prices showed little movement, trading at $2.76 per MMBtu, down $0.01 from the prior settlement. The continued focus for energy markets remains squarely on crude oil supply risks emanating from the Middle East, with traders weighing the high probability of a diplomatic resolution against the material risk of a renewed, wider conflict.