Oil Prices Set for Major Weekly Gains as U.S.-Iran Tensions Escalate

Oil prices continued their ascent in Asian trading on Friday, capping a week of strong gains driven by escalating military tensions between the United States and Iran. Fears of a sustained disruption to energy shipments through the Strait of Hormuz have added a significant risk premium to crude benchmarks.

As of 9:07 PM ET (01:07 GMT), Brent crude futures for November delivery were up 0.2% at $95.67 per barrel, while West Texas Intermediate (WTI) crude futures rose 0.3% to $91.58 per barrel. For the week, Brent is on pace for a 7% gain, and WTI is set for a rally of nearly 10%, with both contracts having touched six-week highs in the previous session.

Geopolitical Flashpoint

The latest surge in prices follows a series of military exchanges this week. The conflict intensified after the U.S. conducted strikes on Iranian targets, including military facilities near the Strait of Hormuz. In response, Iran launched retaliatory missile and drone attacks on U.S. and allied positions in Kuwait, Bahrain, and Jordan, according to reports.

Market focus remains squarely on the Strait of Hormuz, a critical chokepoint for global oil supply. Iran has reportedly expanded restrictions on international shipping in the waterway, exacerbating concerns about a tightening global market. U.S. Vice President JD Vance told reporters on Thursday that Washington has no intention of negotiating with Tehran unless it ceases attacks on commercial vessels in the strait.

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Supply Fundamentals Add Support

Beyond the geopolitical turmoil, signs of tightening inventories are also bolstering prices. Data from the U.S. Energy Information Administration (EIA) showed that commercial crude inventories fell to 424.5 million barrels for the week ending August 28, down from 428.9 million barrels the prior week.

Meanwhile, the market is also watching the Organization of the Petroleum Exporting Countries and its allies (OPEC+). The group is expected to meet on Sunday and is likely to maintain its current oil production policy for October, Reuters reported, citing sources. However, the immediate supply risks in the Strait of Hormuz have largely overshadowed the group's pending decision.