Oil heads for steepest weekly gain since July on US-Iran war

Crude oil prices climbed on Friday, putting both major benchmarks on track for their largest weekly gains since mid-July as escalating hostilities between the United States and Iran raised fears of prolonged supply disruptions in the Middle East.

Brent crude futures rose 0.6% to $96.06 a barrel, while West Texas Intermediate crude futures gained 0.9% to $92.10. On a weekly basis, Brent was up 7.6% and WTI had surged 10.4%, set for the steepest weekly gains since the week ended July 20.thehindubusinessline+1

Escalating Conflict Drives Rally

The price surge followed a week of intensifying military exchanges. US strikes killed and wounded dozens, including Iranian civilians, marking the fiercest clashes between the two countries since July. The war, which began with US-Israeli strikes in late February, is now in its seventh month.tribune

On Wednesday, WTI briefly touched $93.14 a barrel, its highest level for a front-month contract since late July, as Iran escalated retaliatory air strikes on US military bases across the region, including in Kuwait. Israeli Defense Minister Israel Katz warned that Israel would strike Iran's energy infrastructure if Iran attacks Israel.finance.biggo+1

The conflict's impact on the Strait of Hormuz, a critical artery for global crude transport, remained a central concern. The US military had escorted 40 commercial vessels carrying 18 million barrels of oil through the strait by Thursday, reportedly intercepting cruise missile and drone attacks during the operation. Iran expanded its list of vessels it deems non-compliant and subject to detention if they attempt to transit the strait.tribune+1

Vance Rules Out Negotiations

Vice President JD Vance told reporters on Thursday that Washington does not plan to hold talks with Iran unless Tehran stops attacking commercial shipping in the Strait of Hormuz. "When will the Iranians stop shooting at ships? I don't know the answer to that question," he said. The remarks dashed hopes for a near-term diplomatic resolution and helped push prices higher on Friday.thehindubusinessline+1

ANZ analysts raised their Brent crude forecast to $95 a barrel in the short term, with upside risk if the conflict intensifies. ING strategists noted that ICE Brent has held above $95 amid the pickup in hostilities but cautioned that the rally may lose traction if Hormuz shipments keep moving smoothly.tribune+1

Supply Buffers and Rate Concerns

Some factors tempered the rally. Iraq increased its oil exports to around 2.34 million barrels per day in August, up from about 1.35 million bpd in July, as Iranian approvals for Iraqi tankers encouraged buyers. Saudi Arabia kept its official selling price for its flagship Arab Light unchanged at a $2 discount for October loadings, suggesting the market may not be as tight as feared.thehindubusinessline+1

Gold futures also surged during the week, with the benchmark December contract settling 2.8% higher at $4,539.90 an ounce on Thursday after Federal Reserve Governor Waller signaled support for holding interest rates steady at the next FOMC meeting. New York Fed President Williams noted that inflation is moderating as the impact of tariffs fades and that higher oil prices have not spilled over into other service sectors.finance.biggo