Oil Prices Edge Higher Amid Gulf Tensions; Bakken Discount Holds

Oil prices advanced in early trading Saturday, with geopolitical risk in the Persian Gulf continuing to dictate market direction. West Texas Intermediate (WTI) crude was trading 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%). Natural gas prices were steady at $2.76. Bakken crude at the Clearbrook, Minnesota, hub was priced at a $3.42 per barrel discount to WTI, according to live price data.

The gains follow a volatile week where prices fluctuated in a roughly $10 range, driven by shifting expectations for a resolution to the U.S.-Iran conflict. According to a report from Rigzone, Brent crude rose 1.2% on Friday but still notched a weekly decline of about 6%. The market's focus remains squarely on the Strait of Hormuz, a vital shipping chokepoint that has been effectively closed since the war began in late February, triggering an unprecedented supply shock.

Renewed clashes are dimming hopes for a swift peace deal. Rigzone reported that U.S. forces carried out airstrikes on two empty Iranian oil tankers attempting to break a naval blockade and targeted Iranian missile and drone sites. Iran criticized the U.S. for violating a ceasefire agreement and is preparing a plan for the "legal regime" of the strait. "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, chief investment strategist at Saxo Markets in Singapore, in the Rigzone report. Prices briefly dipped Friday after former President Donald Trump announced a three-day ceasefire between Russia and Ukraine, a conflict that has recently been overshadowed by events in the Gulf.

For Bakken operators, the sustained high global price environment driven by geopolitical risk is a positive signal for revenue, though the region's discount to WTI remains a key factor. A Bakken differential of -$3.42 per barrel is a critical metric for wellhead economics. The ongoing supply disruption from the Middle East continues to support global benchmarks, which in turn supports the price floor for domestic grades like Bakken crude.

The heightened tensions have broader economic implications, with the Rigzone report noting the war has imposed an increasing burden on consumers via spiking retail fuel prices and pushed U.S. consumer sentiment to a record low. For North Dakota producers, the immediate outlook hinges on whether diplomacy prevails or the region sees another escalation that could send prices sharply higher, as seen earlier in the week when Brent surged toward $115 after Iranian attacks in the United Arab Emirates.