Oil Nears First Weekly Gain in Three as US-Iran Tensions
Oil Heads for First Weekly Gain in Three as US-Iran Tensions Brew
Oil prices are on track for their first weekly gain in three weeks, supported by escalating tensions between the United States and Iran that have heightened concerns about potential supply disruptions in the Middle East.
Brent crude futures edged higher, while U.S. West Texas Intermediate (WTI) also advanced, as traders priced in a geopolitical risk premium amid fears that diplomatic deadlock and military drills could disrupt flows through the Strait of Hormuz, a strategic chokepoint for about 20% of global oil supply.
Geopolitical Concerns Drive Risk Premium
The market reaction was underpinned by statements from U.S. leadership setting firm timelines for negotiations and warnings of consequences if agreements with Tehran are not reached, intensifying risk sentiment. In response, Iran has conducted military exercises and planned joint naval drills with Russia, fuelling further speculation around regional escalation.
Meanwhile, reports of a 9-million-barrel drop in U.S. crude inventories lent additional support to prices, as refining activity and exports increased, tightening near-term stock levels.
Broader Market Dynamics
Despite firming prices, some analysts warn that fundamental supply and demand factors — including expectations of resumed OPEC+ output increases and persistent surplus forecasts — could limit sustained upside unless geopolitical risks materialise into actual disruptions.
Investors are also weighing macroeconomic data and interest rate expectations, which remain significant drivers of energy demand forecasts and crude price direction.
