Oil Prices Set for Biggest Weekly Gain Since July as U.S.-Iran Tensions Raise Supply Concerns

By COMFORT OGBONNA

Oil prices were little changed on Friday but remained on track for their strongest weekly gain since mid-July as escalating tensions between the United States and Iran increased concerns about potential disruptions to crude supplies from the Middle East.

Brent crude futures were flat at $95.52 a barrel by 0645 GMT, while U.S. West Texas Intermediate crude gained 7 cents, or 0.1%, to $91.36 a barrel. Despite the limited moves in Friday’s session, Brent was up about 7.6% for the week and WTI had climbed 10.4%, putting both benchmarks on course for their biggest weekly increases since the week ended July 20.

The latest gains have been driven largely by fears that renewed fighting between Washington and Tehran could threaten energy infrastructure and disrupt the movement of oil through key shipping routes.

The conflict has also been compounded by attacks on Russian refineries by Ukraine, adding another layer of uncertainty to global fuel supplies. Rising concerns about disruptions have pushed average U.S. diesel prices to record levels as traders assess the potential impact of tighter supplies.

The latest U.S. attacks, which killed and wounded dozens of people, including Iranian civilians, represented the most intense clashes between the two countries since July. The conflict has now entered its seventh month after beginning with U.S. and Israeli strikes in late February.

The threat to energy infrastructure has added to market anxiety. Israeli Defense Minister Israel Katz renewed warnings that Israel would seek to severely damage Iran’s military and civilian infrastructure, including energy facilities.

Analysts at ANZ raised their short-term forecast for Brent crude to $95 a barrel on Friday and warned that prices could rise further if the conflict in the Middle East intensifies.

The analysts said global oil markets were entering a fragile adjustment period. Although elevated inventories have helped cushion the initial disruption to supplies, they said those reserves could become less effective as available buffers decline.

The Strait of Hormuz remains a major focus for oil traders because of its importance to global energy shipments. U.S. Vice President JD Vance said Thursday that Washington was not planning to hold talks with Iran unless Tehran stops attacks on commercial shipping passing through the strategic waterway.

Iran has also expanded its list of vessels considered non-compliant with its rules for transiting the strait. Ships attempting to pass could face fines, confiscation or detention, increasing concerns among traders and shipping companies about the security and reliability of the route.

Iraqi vessels remain among the few ships that Tehran has authorized to continue passing through the Strait of Hormuz.

At the same time, developments surrounding the war in Ukraine provided some relief to oil markets. Russian President Vladimir Putin said there was still a possible path toward an agreement to end the conflict and said both the United States and China were prepared to support a peace settlement.

Any progress toward ending the war could reduce some of the geopolitical risk premium currently reflected in energy prices, although uncertainty over the timing and terms of a settlement remains high.

Iraq has also increased its oil exports, providing additional barrels to international markets. Iraqi oil exports rose to about 2.34 million barrels per day in August from roughly 1.35 million barrels per day in July, according to Iraqi energy officials.

Exports are expected to increase further in September as heavily discounted Iraqi crude attracts buyers and Iranian approvals allow Iraqi tankers to continue operating through the Strait of Hormuz.

The additional Iraqi supply could help ease some pressure on global markets, but traders remain focused on whether the wider Middle East conflict will disrupt production or shipping in the region.

For now, oil prices remain highly sensitive to developments involving Iran, the Strait of Hormuz, Russian energy infrastructure and diplomatic efforts to contain the conflicts. With supply buffers gradually being drawn down, any major disruption could put further upward pressure on crude prices.