Oil prices advanced on Friday and were on track to post their first weekly gain in three weeks, as mounting fears of a potential confrontation between the United States and Iran unsettled markets. The move followed Washington’s warning that Tehran could face consequences within days if it fails to reach an agreement over its nuclear programme.
Brent crude futures climbed 33 cents, or 0.5%, to $71.99 a barrel, while U.S. West Texas Intermediate crude rose 62 cents, or 0.9%, to $67.05 as of 0715 GMT.
“Crude oil prices have edged to six-month highs as concerns over potential supply risks from the Strait of Hormuz keep markets on edge,” said Phillip Nova senior market analyst Priyanka Sachdeva.
On Thursday, U.S. President Donald Trump cautioned that “really bad things” would happen if Iran does not strike a deal regarding its nuclear programme, which Tehran insists is peaceful but Washington views as having military ambitions. Trump indicated a timeframe of 10 to 15 days.
At the same time, Iran has scheduled joint naval drills with Russia, according to a local news agency, shortly after temporarily shutting the Strait of Hormuz for military exercises.
Iran sits across from the oil-rich Arabian Peninsula along the Strait of Hormuz, a critical waterway through which roughly 20% of global oil supplies are transported. Any outbreak of hostilities in the region could restrict flows to international markets and drive prices higher.
“Market focus has clearly shifted to escalating Middle East tensions after the failure of multiple rounds of U.S.-Iran nuclear talks, even as investors debate whether any actual disruption will materialise,” Sachdeva added.
Additional support for crude came from signs of tightening supply in key producing nations.
U.S. crude stockpiles fell by 9 million barrels last week as refinery utilisation rates and exports increased, according to data released Thursday by the Energy Information Administration.
However, gains were tempered by uncertainty surrounding the path of U.S. interest rates, given the country’s position as the world’s largest oil consumer.
“Recent Fed minutes pointing to steady rates or even the risk of further hikes if inflation stays sticky could cap demand,” said Phillip Nova’s Sachdeva.
Lower interest rates are generally viewed as supportive for oil demand and prices.
Investors are also weighing the impact of ample global supply, amid expectations that OPEC+ could move toward resuming output increases starting in April.
The supply surplus observed in the latter half of 2025 persisted into January and “is likely to persist”, JP Morgan analysts Natasha Kaneva and Lyuba Savinova said in a note to clients.
“Our balances continue to project sizable surpluses later this year,” they said, adding that production cuts of around 2 million barrels per day would be required to avoid significant inventory builds in 2027.