Oil prices were little changed in early trading on Friday but remained on course for their first weekly gain in three weeks. Ongoing uncertainty surrounding the U.S.-Iran conflict and possible supply disruptions in West Asia continued to support a geopolitical risk premium.
However, crude gave back part of its weekly advance after major energy organizations lowered their demand forecasts for this year. A larger-than-expected increase in U.S. oil inventories also pressured sentiment.
Brent crude futures rose 0.08% to $87.14 a barrel, while West Texas Intermediate crude gained 0.13% to $81.36 a barrel as of 00:01 ET, or 04:01 GMT.
Iran Tensions Support Weekly Oil Gains
Brent and WTI were both up around 4% for the week as traders continued to price in the risk of further supply disruptions across the Middle East.
The United States and Iran have issued conflicting statements regarding control of the Strait of Hormuz and the status of commercial shipping through the crucial waterway.
Uncertainty over the shipping route remains a major factor supporting crude oil prices.
U.S. Warns of More Economic Pressure on Iran
Comments from U.S. Treasury Secretary Scott Bessent added to market caution. He warned that Washington could impose exceptionally severe economic measures against Iran.
Earlier in the week, Tehran said it had full control of the Strait of Hormuz and claimed the waterway was closed to commercial shipping.
The United States, however, said it was continuing to support vessel movements through the region.
Independent shipping data also indicated that many vessels were still avoiding the Strait amid concerns about renewed military action between Washington and Tehran.
Strait of Hormuz Remains Critical for Global Oil Supply
The potential disruption of the Strait of Hormuz has been one of the biggest sources of support for oil prices this year.
Around 20% of global oil consumption normally passes through the waterway, making any prolonged disruption a major risk for international energy markets.
Supply concerns have also increased after Yemen’s Iran-backed Houthi movement resumed attacks on commercial vessels in the Red Sea and the Bab al-Mandab Strait.
That shipping lane is another important route for global crude and energy transportation.
Weaker Oil Demand Outlook Limits Price Gains
Despite geopolitical risks, oil’s weekly advance was limited after both the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) lowered their demand forecasts for the year.
The two major energy organizations warned that slower economic growth, elevated oil prices and constrained supplies could reduce consumption in the months ahead.
Those concerns have partially offset the bullish impact of potential supply disruptions in the Middle East.
U.S. Oil Inventories Rise Sharply
A surprise increase in U.S. crude inventories added further pressure to the market.
The larger-than-expected stock build raised questions about near-term demand in the world’s largest oil-consuming economy.
At the same time, separate data showed that the U.S. emergency petroleum reserve remains near its lowest level in more than four decades.
For now, oil prices remain caught between concerns over weakening global demand and the risk that escalating tensions around Iran and key shipping routes could disrupt supplies.
