Oil prices moved higher on Friday and were on track for their first weekly gain in three weeks, as rising tensions between the United States and Iran fueled concerns about potential supply disruptions.
Brent crude futures climbed 0.5% to $71.99 per barrel, while U.S. West Texas Intermediate (WTI) crude advanced 0.9% to $67.05 in early trading. The gains came amid growing geopolitical risks in the Middle East.
Market analysts noted that crude prices have approached six-month highs due to fears that instability around the Strait of Hormuz could threaten global oil flows. The strategic waterway carries roughly 20% of the world’s oil supply, making it a critical chokepoint for energy markets.
U.S. President Donald Trump warned that Iran would face serious consequences if it failed to reach a nuclear agreement within 10 to 15 days. Washington maintains that Tehran’s nuclear program has military objectives, while Iran insists it is for peaceful purposes. In response to mounting tensions, Iran announced plans for joint naval exercises with Russia, shortly after temporarily closing the Strait of Hormuz for military drills.
Investors are closely watching developments, as any escalation in the region could restrict oil exports and tighten global supply. Analysts say market attention has clearly shifted toward Middle East risks, even as traders debate whether an actual disruption will occur.
Oil prices also found support from supply-side data. U.S. crude inventories fell by 9 million barrels, according to the Energy Information Administration (EIA), driven by higher refining activity and stronger exports. Lower stockpiles typically indicate tighter supply conditions, which can lift prices.
However, gains were capped by concerns about U.S. monetary policy. Recent Federal Reserve minutes suggested interest rates may remain elevated or even rise further if inflation remains persistent. Higher borrowing costs can slow economic activity and reduce fuel demand, limiting upside for crude prices.
At the same time, markets are weighing the impact of abundant global supply. OPEC+ is reportedly considering resuming oil output increases from April. Analysts at JP Morgan noted that an oil surplus observed in the second half of 2025 continued into January and is likely to persist. They estimate that production cuts of around 2 million barrels per day may eventually be required to prevent excessive inventory builds in 2027.
