Oil Prices Surge Toward Biggest Weekly Gain Since July on Heightened US-Iran Tensions

Oil prices are on track for their steepest weekly gain since mid-July, as escalating tensions between the United States and Iran stoke investor fears about significant supply risks in the Middle East. The rise reflects a growing geopolitical risk premium being priced into the market.

As of 0100 GMT on Friday, the global benchmark Brent crude futures traded up 0.2% at $95.67 a barrel, while U.S. West Texas Intermediate (WTI) crude futures rose 0.3% to $91.56, according to a Reuters report.

Geopolitical Tensions Fuel Supply Fears

The primary driver for the price surge is the recent intensification of hostilities. U.S. attacks this week, which reportedly killed and wounded dozens, including Iranian civilians, have marked the most severe clashes between the two nations since July. The conflict, which the source notes began with U.S.-Israeli strikes, has now entered its seventh month.

Adding to market anxiety, Israeli Defence Minister Israel Katz issued renewed warnings that Israel would "cripple" Iran’s military and civilian infrastructure, specifically mentioning energy facilities. Meanwhile, U.S. Vice President JD Vance told reporters that Washington would not engage in talks with Tehran until it ceases attacks on commercial shipping in the critical Strait of Hormuz, a vital chokepoint for global oil transit.

Market Metrics and Balancing Factors

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The recent price action has pushed weekly gains to significant levels, set to be the highest since the week ended July 20. Key weekly performance figures include:

• Brent crude: On track for a 7.1% weekly increase.
• WTI crude: Set for a 9.8% weekly gain.

However, some market developments are capping a more aggressive price advance. Russian President Vladimir Putin stated that a path to a peace deal in Ukraine remains possible, with both the U.S. and China reportedly prepared to support a settlement. A resolution to that conflict could impact global energy demand and trade flows.

On the supply side, Iraq increased its oil exports to approximately 2.34 million barrels per day (bpd) in August, a substantial rise from 1.35 million bpd in July, according to Iraqi energy officials. Exports are expected to remain strong in September, partly due to Iranian approvals for Iraqi tankers to pass through the Strait of Hormuz, potentially offsetting some of the broader supply concerns.