Oil prices head for biggest weekly gain since 2020 as shipping nears standstill

Oil prices could be headed for their biggest weekly increase in six years as hopes of conflict de-escalating in the Middle East begin to fade and markets brace for longer-lasting volatility.

The price of Brent crude oil was rising on Friday to surpass 88 US dollars a barrel, its highest price since April 2024.

This means it has jumped by about 21% over the past week – slightly above the weekly gain recorded during March 2022, when prices rocketed in the aftermath of Russia’s invasion of Ukraine.

Prior to that, Brent crude oil prices shot up by around 23% in May 2020.

If the gains hold through to the end of the day, when markets close, then it would mark the biggest weekly increase since the Covid-19 pandemic.

Worries about disruption to shipping routes constricting supply of the commodity have sent wholesale prices soaring through the week.

The Joint Maritime Information Centre, which provides reports to shipping companies, said in a note on Thursday that there was a “near-total temporary pause” in traffic through the Strait of Hormuz with only two confirmed commercial transits observed in the previous 24 hours.

Shipping firms are reacting to a combination of security threats, insurance constraints, operational uncertainty and disruption rather than a “declared blockade”, it said.

The Strait of Hormuz is a vital shipping route that transports about a fifth of the world’s oil and gas supplies.

Greg Jackson, the boss of Octopus Energy, told Times Radio that energy markets were “in a state of turmoil” after Iran warned ships not to pass through the waterway and Qatar said it had halted gas production following attacks on its plants.

Despite this, experts pointed out that oil prices remained far off levels seen during previous periods of turbulence, namely Russia’s invasion of Ukraine in 2022 which sparked an energy crisis.

Rachel Winter, partner at Killik & Co, said: “Oil prices continued to climb overnight, and Brent crude is now up around 25% since the start of February.

“Consumers won’t feel the full price difference at the pump quite yet as many companies buy oil in advance, but this could change if the conflict persists.

“The market seems hopeful for a quick resolution, or for some form of Government intervention, as we haven’t seen oil prices rise to levels previously seen during times of significant and prolonged disruption.

“For example, the price of Brent passed 120 dollars per barrel following Russia’s invasion of Ukraine in 2022, but it currently sits below 90 dollars despite its recent increase.”