Oil prices increased on Friday after Iran announced a draft plan to restrict passage through the Strait of Hormuz, fueling concerns over potential supply disruptions.

International benchmark Brent crude futures for October delivery rose 1.25%, closing at $83.52 per barrel. Meanwhile, US West Texas Intermediate crude futures for the September contract gained 1.10%, settling at $78.14 per barrel.

Westpac Banking Corp noted in a report: "Higher oil prices indicate that further inflationary pressure from energy and the situation in the Middle East cannot be ignored, which is pushing the US dollar higher and government bonds lower."

According to the apparent draft plan released by Iran, the country would ban US and Israeli vessels from transiting the strait. The draft also stipulates that other nations that have harmed Iran's interests would be barred from passage until compensation payments are made.

Reports indicate that Iran and Oman are working on an agreement to define transit routes through the Strait of Hormuz, though the final deal has not yet been announced. According to media reports, inbound traffic would use Iranian waters, while outbound traffic would pass through Omani waters.

United Overseas Bank stated in a report: "Adding to supply concerns are Ukraine's overnight attacks on two major Russian refineries (the Yaroslavl/Yanos refinery and Bashneft's new plant), as well as US crude imports from Saudi Arabia falling to zero in July for the first time since 1985."

Conflicting statements from both sides regarding bilateral contacts have made progress on the Strait of Hormuz transit agreement unclear. Although US President Donald Trump stated in the Oval Office that the Iran war would end "soon," Tehran accused him of engaging in "theatrical diplomacy."