Oil prices were largely unchanged on Friday, yet they were poised for substantial weekly gains. Traders were assessing fresh hostilities between the U.S. and Iran against the expectation that the conflict would not escalate into a prolonged regional war, and thus would not severely interrupt oil supplies from the Persian Gulf. Brent Oil Futures eased slightly by 0.07% to $76.25 a barrel, while Crude Oil WTI Futures slipped 0.1% to $72.01 a barrel as of 14:18 ET (18:18 GMT). Despite the day's subdued trading, Brent was on track to rise approximately 5% for the week, and WTI about 4%, following initial fears of supply disruptions sparked by attacks around the Strait of Hormuz.
The recent escalation included U.S. airstrikes on Iranian military targets, aimed at degrading Iran’s ability to threaten commercial shipping. Iran retaliated with missile and drone attacks on U.S.-aligned nations such as Bahrain, Kuwait, Qatar, and Jordan. This series of attacks followed earlier incidents where commercial vessels in and around the Strait of Hormuz were targeted, prompting shipping operators to delay or reroute. While tanker traffic has partially recovered since a June agreement, movements remain below pre-conflict levels due to ongoing security assessments by insurers and shipowners, according to Investing.com.
Analysts at IG noted that crude's relatively muted reaction to continued military exchanges reflects growing confidence that the current flare-up will remain contained. They pointed out that U.S. strikes have focused on Iranian military infrastructure rather than oil production facilities, and crude flows from the Gulf have remained largely stable. This has limited fears of an immediate supply shock. President Donald Trump indicated the attacks on shipping ended a fragile ceasefire and warned of stronger U.S. responses if vessels are targeted again. Simultaneously, regional diplomatic efforts continue, with Iranian Foreign Minister Abbas Araghchi engaging in talks with counterparts from Saudi Arabia, Oman, and Turkey to prevent the conflict from spreading.
The overall market sentiment suggests that a full-scale war is unlikely, with analysts like Ipek Ozkardeskaya from Swissquote stating that the market has grown accustomed to tensions and disruptions in the Strait of Hormuz. Soojin Kim, an analyst at MUFG, highlighted that the trajectory of the US-Iran conflict, the security of shipping through the Strait of Hormuz, and potential disruptions to Gulf oil exports will be key drivers for future oil prices. However, IG emphasized that significant upside risks for oil would only materialize if Washington tightened restrictions on Iranian crude exports or if the conflict directly threatened energy infrastructure or shipping through the Strait of Hormuz. For now, resilient Gulf exports and regional resistance to shipping disruptions have capped further price gains.
