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Oil Prices Poised for Weekly Gain as Mideast Supply Risks Counter Demand Fears
Oil prices edged lower in early Friday trading but remained on course for a significant weekly gain, with the market balancing persistent geopolitical risks in the Middle East against growing concerns over the global demand outlook.
According to a Reuters report, Brent futures slipped 6 cents to $76.24 a barrel, while U.S. West Texas Intermediate (WTI) crude was down 4 cents at $72.04 a barrel as of 0125 GMT.
Supply Risks Drive Weekly Performance
Despite the minor dip, crude benchmarks are set for substantial weekly increases, with Brent on track for a 6% gain and WTI heading for a 5% rise. The gains are primarily fueled by escalating tensions between the United States and Iran.
Reports indicate that Iranian armed forces launched attacks on U.S. military infrastructure in Gulf states on Thursday, following U.S. strikes on Iranian provinces. This conflict has delayed the full reopening of the Strait of Hormuz, a critical chokepoint through which about 20% of daily global oil and gas supplies passed before the recent hostilities.
AdEconomic Headwinds Weigh on Prices
Capping further gains are concerns that accelerating inflation could soften crude oil demand. In China, the world's second-largest oil consumer, producer price inflation surged to a four-year high in June, squeezing manufacturers' profit margins and signaling potential weakness in domestic demand.
Meanwhile, the market is also digesting comments that suggest the conflict may not escalate to target energy production. "Despite the U.S. ramping up attacks on military sites in Iran, the market drew some reassurance from the Trump administration’s decision to avoid targeting Iranian energy infrastructure," said Daniel Hynes, senior commodity strategist for ANZ bank, in a note cited by Reuters.