Oil prices were on track for weekly gains Friday as renewed geopolitical tensions in the Middle East, concerns over disruptions to crude flows through the Strait of Hormuz and tightening supply signals outweighed improving prospects for diplomacy between the US and Iran.
International benchmark Brent crude traded at $94.76 per barrel at 2.56 p.m. local time (1156 GMT), up 2.9% from last Friday’s close of $92.05, while US benchmark West Texas Intermediate (WTI) rose 6.3% on a weekly basis to $92.86 per barrel, compared with $87.36 a week earlier.
Oil prices started the week on a strong footing after the US and Iran exchanged attacks over the weekend, raising concerns that tensions could spread across key oil-producing and shipping regions in the Middle East. Continued clashes between Israel and Hezbollah despite ceasefire efforts further reinforced fears over regional supply security.
Prices extended gains with Brent climbing above $97 per barrel as uncertainty surrounding a proposed US-Iran agreement to extend a ceasefire and reopen the Strait of Hormuz kept markets on edge. Investor concerns deepened after reports that Tehran had suspended indirect contacts with Washington through mediators and was considering measures including the complete closure of the strategic waterway.
Markets turned higher again midweek after renewed military tensions in the Gulf. Reports of missile and drone attacks involving US and Iranian forces, along with developments near the Strait of Hormuz, revived concerns over potential supply disruptions and supported prices.
- Falling US inventories, Russia sanctions support prices
Additional support came from supply-side factors. The US Energy Information Administration reported that commercial crude inventories fell by about 8 million barrels last week, indicating resilient fuel demand in the world's largest oil consumer. Oil prices also found support after the US House of Representatives approved legislation that would expand sanctions on Russia's oil and gas sector, raising concerns about future Russian supply availability.
Macroeconomic developments also remained in focus. In the US, initial jobless claims rose by 13,000 to 225,000 in the week ended May 30, while stronger-than-expected labor market indicators reinforced expectations that the Federal Reserve could maintain a tighter monetary policy stance to contain inflation.
- Diplomacy hopes cap gains
However, gains were limited as diplomatic signals from Washington and Tehran improved throughout the week. US President Donald Trump repeatedly said negotiations with Iran were continuing and suggested an agreement could be reached within days, while Iranian officials indicated communication channels remained open despite limited progress in talks.
Additional downward pressure came from expectations that any potential agreement could include the reopening of the Strait of Hormuz and measures addressing Iran's nuclear program, easing fears of disruptions to oil flows through one of the world's most important energy chokepoints.
Market sentiment was also weighed down by hopes that Israel and Lebanon could move toward implementing a ceasefire, reducing concerns over broader regional instability and potential supply disruptions. Reports that the US House of Representatives approved a war powers resolution aimed at limiting military operations against Iran further reinforced expectations that both sides remain committed to diplomacy rather than escalation.
Beyond the Middle East, hopes for renewed diplomacy in Eastern Europe also eased risk sentiment. Kremlin spokesman Dmitry Peskov said Moscow hopes negotiations with Ukraine will resume after a recent pause and confirmed that communication channels with the US remain open.
By Duygu Alhan
Anadolu Agency
