Oil Prices Near Six-Month Highs as U.S.–Iran Tensions Intensify
Oil prices hovered close to six-month highs on Friday, heading for their first weekly gain in three weeks. The move follows renewed geopolitical tensions after U.S. President Donald Trump warned Iran that “bad things” would happen if it failed to reach a nuclear agreement in the coming days.
Brent crude futures slipped slightly by 8 cents but remained steady at around $71.58 per barrel by 14:42 GMT. Meanwhile, U.S. West Texas Intermediate (WTI) crude traded at $66.44 per barrel. Over the course of the week, both Brent and WTI gained approximately 5.3%.
Market Awaits Weekend Developments in the Middle East
Investors are closely watching how tensions in the Middle East unfold over the weekend. According to UBS oil analyst Giovanni Staunovo, traders appear reluctant to close positions or take profits before gaining more clarity on the situation.
Iran’s foreign minister indicated that a draft counterproposal could be ready within days following recent nuclear discussions. At the same time, President Trump stated that limited military strikes remain under consideration, adding to market uncertainty.
Geopolitical Risk Supports Higher Oil Prices
Iran is a key oil producer located across the Strait of Hormuz, a strategic passage through which roughly 20% of global oil supply flows. Any disruption in this region could significantly restrict oil shipments and tighten global supply, pushing oil prices higher.
Ole Hansen, head of commodity strategy at Saxo Bank, described the market environment as cautious, noting that traders are waiting to see whether geopolitical risks escalate further.
Recent data shows that investors have increased purchases of call options on Brent crude, signaling expectations of higher oil prices in the near term.
Supply Factors Also Influence Oil Market
Beyond geopolitical tensions, supply dynamics are also shaping the oil market outlook.
U.S. crude inventories fell by 9 million barrels last week, according to the Energy Information Administration (EIA). The decline came as refining activity and exports increased, supporting higher prices.
However, markets are also evaluating the potential impact of abundant global supply. Discussions within OPEC+ suggest a possible resumption of oil output increases starting in April.
Analysts at JP Morgan noted that the oil surplus observed in the second half of 2025 continued into January and may persist. Their projections indicate significant supply surpluses later this year unless production cuts of around 2 million barrels per day are implemented to prevent excess inventory accumulation by 2027.
