Oil Prices Set for Biggest Weekly Gain Since July as US-Iran Tensions Escalate

US, Sep 04 : Oil prices edged higher on Friday, putting both major benchmarks on course for their strongest weekly gains since mid-July as renewed clashes between the United States and Iran intensified concerns about potential disruptions to crude supplies from the Middle East.

Brent crude futures gained 15 cents, or 0.2%, to $95.67 a barrel at 0100 GMT. US West Texas Intermediate (WTI) crude futures advanced 26 cents, or 0.3%, to $91.56 a barrel.

For the week, Brent was up 7.1%, while WTI had climbed 9.8%, placing both contracts on track for their biggest weekly advances since the week ending July 20.

Renewed clashes raise supply concerns

The latest escalation followed US attacks earlier this week that reportedly killed and wounded dozens of people, including Iranian civilians. The clashes represent the most intense confrontation between Washington and Tehran since July.

The conflict, which began following US-Israeli strikes at the end of February, has now entered its seventh month, adding further uncertainty to energy markets already sensitive to developments across the region.

Concerns increased after Israeli Defence Minister Israel Katz renewed threats against Iran, warning that Israel could target and severely damage the country’s military and civilian infrastructure, including energy-related facilities.

Strait of Hormuz remains a major focus

The Strait of Hormuz has emerged as a key source of uncertainty for oil traders. US Vice President JD Vance said on Thursday that Washington was not planning to negotiate with Tehran unless Iran stopped attacks on commercial vessels using the strategic waterway.

Iran, meanwhile, expanded its list of vessels considered non-compliant with its requirements. Such ships could face penalties including fines, confiscation or detention if they attempt to pass through the strait.

Only a limited number of vessels, including Iraqi ships, have reportedly received clearance from Tehran to transit the waterway.

Any prolonged disruption around Hormuz could have significant implications for global energy markets because the waterway is a crucial route for international oil shipments.

Ukraine developments temper oil gains

Despite the Middle East risk premium, oil’s rise was partly restrained by developments surrounding the war in Ukraine.

Russian President Vladimir Putin said there was still a possible route toward an agreement to end the conflict. He also indicated that the United States and China were prepared to support efforts aimed at reaching a peace settlement.

The prospect of progress on the Ukraine conflict could ease some geopolitical pressure on global energy markets, limiting the upward momentum in crude prices.

Iraqi exports increase

Additional supply from Iraq also provided some relief to the market.

Iraq’s oil exports rose to approximately 2.34 million barrels per day in August, up from around 1.35 million bpd in July, according to two Iraqi energy officials.

Exports are expected to increase further in September, with heavy discounts and Iranian approvals for Iraqi tankers encouraging buyers.

The higher Iraqi shipments could help offset some supply concerns stemming from the broader regional conflict.

For now, traders remain focused on developments involving Iran, Israel and the United States, particularly any threats to energy infrastructure or commercial shipping through the Strait of Hormuz. Continued escalation could keep crude prices elevated, while signs of de-escalation may reduce the geopolitical premium built into oil markets.