International oil prices rose for a second consecutive day following attacks on Saudi Arabia's energy infrastructure that reduced its production capacity. Despite the gains, prices are still on track for their largest weekly decline since June of last year. After climbing 3.7% in volatile trading on Thursday, WTI crude approached $98 per barrel, yet it remains down more than 10% for the week. Brent crude traded near $96 per barrel.

Attacks on energy infrastructure have reportedly cut Saudi Arabia's daily oil production by approximately 600,000 barrels. This figure represents about 10% of the kingdom's typical crude exports. Separately, reports indicate that a key east-west pipeline transporting oil to the Red Sea was recently attacked, reducing its flow by 700,000 barrels per day. Kuwait also stated it had intercepted drone attacks targeting critical facilities.

"The reduction in flows through the east-west pipeline undermines Saudi Arabia's strategy to bypass the Strait of Hormuz and highlights persistent supply risks," said Mohit Veramala, a global oil analyst at BloombergNEF. "This further tightens crude supplies in Asia."

U.S. President Donald Trump expressed strong optimism on Thursday about reaching a deal with Iran and suggested Israel would take a "low-key" approach against Iran-backed Hezbollah militants in Lebanon. However, Israeli Prime Minister Benjamin Netanyahu reiterated that ongoing attacks fall outside the scope of any U.S.-Iran ceasefire. President Trump later issued a threat to Tehran concerning tolls in the Strait of Hormuz, warning on social media, "Reports suggest Iran is charging fees for oil tankers passing through the Strait of Hormuz. They better not do it, and if they are, they should stop immediately!"

Attention now turns to Islamabad, where U.S. Vice President Vance is expected to lead an American delegation in talks with Iranian officials on Saturday. A key topic will be the Strait of Hormuz, which has been nearly completely closed since late February, disrupting one-fifth of global oil and liquefied natural gas shipments and causing a significant supply shock.

In an interview, President Trump described Iranian leaders as "more reasonable than their public statements suggest." Nevertheless, Iran's new supreme leader, Mujahid Khamenei, declared that Iran "will certainly elevate the management of the Strait of Hormuz to a new stage."

International oil prices have experienced extreme volatility. A reported U.S. agreement for a two-week ceasefire in exchange for Iran allowing ship passage through the strait initially caused prices to plummet nearly 20% on Tuesday. However, the CEO of the UAE's national oil company stated on Thursday that the strait remains effectively closed. Sultan Ahmed Al Jaber, CEO of Abu Dhabi National Oil Company, clarified, "At this moment, a clear stance is needed. So let's be clear: the Strait of Hormuz is not open. Transit is restricted, constrained, and controlled."

"The market is refocusing on the energy transit situation in the Strait of Hormuz, which remains far from normal and is unlikely to return to normal quickly," said Rebecca Babin, senior energy trader at CIBC Private Wealth Group.

According to Matt Smith, an oil analyst at Kpler, producers in the Gulf of Mexico have cut output by approximately 13 million barrels per day due to the strait's disruption. Since the conflict began, the oil market has experienced intense volatility, forcing traders to reduce position sizes and holding periods. Daily price swings have exceeded $9 on average, marking the largest intraday fluctuations in years.

At the time of writing, the May WTI crude futures contract was up 0.63% at $98.49 per barrel, while the June Brent crude futures contract rose 0.41% to $96.80.