Oil Gains on Iran Tensions

Crude oil traded around $91.2 a barrel on Friday and was up more than 9% for the week, marking its strongest weekly performance since mid-July, as the war in the Middle East continued with little prospects of peace. Iran and the US exchanged missile strikes this week, while Israel’s defense minister threatened “crippling” attacks on Iran’s infrastructure, including energy facilities. Meanwhile, US Vice President JD Vance said the US does not plan to hold peace talks with Iran until it stops attacking ships in Hormuz, adding to upward pressure on oil prices as Iran signals its determination to maintain a hard-line response to the latest US strikes. The EU has formally joined the US-led sanctions campaign against Iran, while South Korea said it is considering a military role. The rally could lose momentum if shipments through the Strait increase. Reports on Iraqi oil exports indicate an average of 2.35 million barrels per day in August, mostly shipped through southern routes.

Crude oil traded around $91 a barrel on Friday and was up nearly 9% for the week, marking its strongest weekly performance since mid-July, as tensions between the US and Iran continued to drive market sentiment. US-Iran strikes resumed this week for the first time in about a month, reigniting concerns over supply disruptions. Israeli warnings that it would “cripple” Iran’s military and civilian infrastructure also weighed on sentiment. Meanwhile, US Vice President JD Vance said on Thursday that Washington does not plan to hold talks with Tehran unless Iran stops attacking commercial shipping in the Strait of Hormuz. However, there were signs that crude supplies were still reaching the market and Iraq’s oil exports rose in August and are expected to increase further in September. Meanwhile, OPEC+ is likely to keep its oil output policy unchanged for October at its meeting on Sunday.

Crude oil traded near $91 per barrel on Friday and was on track for a gain of about 9% this week, underpinned by renewed hostilities in the Middle East and growing uncertainty surrounding shipping through the Strait of Hormuz. The US carried out fresh strikes against Iran this week following roughly a month of relative calm, prompting Tehran to retaliate by targeting American bases in the region and vessels passing through Hormuz. Six commodity vessels transited the strait on Wednesday, down from 11 on Tuesday and compared with a 10-day average of nearly 13. Damage to refineries in the Middle East and Russia, coupled with limited capacity elsewhere to compensate for supply disruptions, is also expected to keep global fuel prices elevated into next year. Meanwhile, US diesel prices reached their highest level since mid-2022 this week, while inventories in Europe remain well below seasonal norms.