Oil Prices Rise as Supply Risks Persist Ahead of U.S.-Iran Talks
Oil prices moved slightly higher on Friday, extending modest gains from the previous session as investors continued to assess supply risks in the Middle East ahead of upcoming U.S.-Iran negotiations.
Brent crude rose 1.0% to $96.83 per barrel, while U.S. West Texas Intermediate (WTI) gained 0.9% to $98.78 per barrel. Despite these daily gains, both benchmarks remain on track for weekly losses of more than 10%.
Strait of Hormuz Disruptions Support Oil Prices
Crude prices continue to find support from ongoing disruptions in the Strait of Hormuz, a critical route for global oil transportation.
Earlier in the week, oil prices dropped sharply after U.S. President Donald Trump announced a temporary two-week ceasefire with Iran. The agreement was linked to expectations of reopening the Strait of Hormuz and restoring oil flows.
However, despite the ceasefire, shipping activity through the strait remains severely limited. Reports indicate that tanker traffic is still operating at less than 10% of normal levels, with Iran requiring vessels to remain within its territorial waters.
Middle East Tensions Remain Elevated
Geopolitical tensions remain high, undermining confidence in a lasting resolution. Shortly after the ceasefire announcement, Israel carried out airstrikes against Iran-aligned Hezbollah forces in Lebanon, stating that its conflict with Hezbollah was not included in the agreement.
Israeli Prime Minister Benjamin Netanyahu has reiterated that there is no ceasefire in Lebanon, although discussions with the Lebanese government regarding Hezbollah disarmament may begin.
These developments continue to create uncertainty around the broader stability of the region and the outlook for global energy supply.
Supply Disruptions Extend Beyond Hormuz
Additional pressure on oil markets has come from disruptions to Saudi Arabia’s energy infrastructure. Recent attacks have reduced the country’s oil production capacity by approximately 600,000 barrels per day, while also cutting throughput on the East-West Pipeline by around 700,000 barrels per day.
Given the importance of Middle Eastern energy exports, these disruptions are particularly significant for Asian importers and European countries that rely on regional oil and gas supplies.
Ceasefire Uncertainty Keeps Markets on Edge
Investor sentiment remains cautious as doubts persist over the durability of the ceasefire. Market participants are closely watching developments ahead of scheduled talks between the United States and Iran in Pakistan.
Iranian officials have denied reports that a delegation has arrived for negotiations, indicating that talks could remain suspended unless conditions related to Lebanon are addressed.
At the same time, President Trump has increased pressure on Tehran, warning against imposing fees on ships passing through the Strait of Hormuz and criticizing Iran’s handling of energy supply flows.
Outlook: Volatility Likely to Continue
With geopolitical tensions unresolved and supply disruptions ongoing, oil markets are expected to remain highly sensitive to headlines in the coming days. The outcome of U.S.-Iran talks will be a key factor in determining the next direction for crude prices.
