Oil prices moved lower on Friday but remained on course for strong weekly gains as renewed tensions between the United States and Iran kept concerns over energy supplies through the Strait of Hormuz elevated.
Brent crude and WTI both remained close to six-week highs as traders continued to assess the risk of prolonged disruptions to one of the world’s most important oil shipping routes.
Oil Prices Pull Back After Strong Weekly Rally
As of 07:59 ET, Brent crude futures for November delivery fell around 0.4% to $95.15 per barrel.
WTI crude futures declined roughly 0.6% to $90.77 per barrel.
Despite Friday’s pullback, Brent was heading for a weekly gain of around 7%, while WTI was on track to rise approximately 10%.
Both benchmarks had reached their highest levels in about six weeks during the previous session.
US-Iran Tensions Support Oil Prices
The latest rise in geopolitical risk followed U.S. strikes against Iranian targets earlier in the week.
Those operations reportedly included military assets located near the Strait of Hormuz.
Iran responded with missile and drone attacks against U.S. and allied positions across the Gulf region, including locations in Kuwait, Bahrain and Jordan.
The escalation has increased concerns that the conflict could create broader disruptions across regional energy markets.
Strait of Hormuz Remains the Main Supply Risk
The Strait of Hormuz remains the biggest concern for oil traders.
Iran has expanded restrictions on international shipping through the waterway, raising fears that oil and energy shipments could face prolonged disruption.
Any significant slowdown in traffic through Hormuz could tighten global crude supplies and place additional upward pressure on oil prices.
The narrow shipping route plays a critical role in global energy trade, making developments in the region particularly important for crude markets.
Diplomatic Tensions Remain Elevated
The conflict has also increased concerns over civilian casualties.
Reports indicated that a U.S. strike hit an area in southern Iran where a wedding was taking place, resulting in civilian deaths. Tehran strongly condemned the incident.
Meanwhile, U.S. Vice President JD Vance said Washington did not intend to begin talks with Iran unless Tehran stopped targeting commercial shipping in the Strait of Hormuz.
That position suggested that a rapid diplomatic breakthrough remained unlikely.
Hormuz Shipping Could Determine Oil’s Next Move
ING analysts said escalating tensions were helping support crude prices.
However, they also indicated that the rally could lose momentum if oil shipments through the Strait of Hormuz continue without major disruption.
For traders, the actual flow of energy through the waterway may therefore be more important than geopolitical headlines alone.
If shipping continues relatively smoothly, part of the geopolitical risk premium in oil prices could begin to fade.
Falling US Crude Inventories Add Support
Oil prices are also receiving support from signs of tighter U.S. inventories.
U.S. commercial crude inventories fell to approximately 424.5 million barrels during the week ended August 28, according to the Energy Information Administration.
That was down from around 428.9 million barrels one week earlier.
The U.S. Strategic Petroleum Reserve stood at roughly 286.6 million barrels.
Lower commercial inventories can support oil prices because they suggest tighter near-term supply conditions.
OPEC+ Output Policy in Focus
Investors are also preparing for the next OPEC+ meeting.
The producer group is expected to leave its October oil production policy unchanged when members meet on Sunday.
The meeting comes as OPEC+ completes the reversal of one layer of previous production cuts.
However, disruptions and uncertainty around the Strait of Hormuz have reduced the immediate influence of OPEC+ production decisions on oil prices.
Geopolitical supply risks are currently playing a much larger role in market sentiment.
What Comes Next for Oil Prices?
Oil prices remain supported by a combination of geopolitical tensions, tighter U.S. inventories and concerns over supply through the Strait of Hormuz.
However, the strength of the rally may depend on whether shipping disruptions become more severe.
If energy flows through Hormuz remain stable, oil prices could lose some of their recent risk premium.
On the other hand, further escalation between the United States and Iran or additional restrictions on shipping could push crude prices higher and keep global supply concerns firmly in focus.
