Oil prices moved higher during Asian trading on Friday after Hezbollah dismissed a proposed ceasefire arrangement between Israel and Lebanon, dealing a setback to diplomatic efforts led by the United States to ease tensions across the Middle East.
The renewed geopolitical uncertainty helped support crude markets, which were already on track for a solid weekly gain amid ongoing military confrontations involving Iran, the United States, Israel and Hezbollah.
Crude Benchmarks Extend Recent Strength
By 23:05 ET (03:05 GMT), Brent crude futures for August delivery had climbed nearly 0.8% to $95.75 per barrel. U.S. West Texas Intermediate futures also advanced, gaining 0.5% to trade at $90.47 per barrel.
The latest move added to a week of strong performance for energy markets, driven largely by concerns over supply disruptions linked to the conflict in the Middle East.
Hezbollah Dismisses Truce Efforts
Hezbollah, the Iran-backed armed group based in Lebanon, rejected the ceasefire proposal on Thursday and indicated it would neither withdraw its forces nor support the current negotiations between Lebanon and Israel.
Meanwhile, Israeli military operations continued in southern Lebanon, prompting retaliatory strikes from Hezbollah. Israeli officials signaled that military activity would continue and that there were no immediate plans to pull forces out of the area following a brief operational pause earlier in the week.
Peace Prospects Between Washington and Tehran Weaken
The latest developments have further complicated hopes for a broader diplomatic breakthrough between the United States and Iran.
Tehran has repeatedly stated that a ceasefire in Lebanon is a key condition for any durable peace agreement. Earlier reports suggested that Iran had suspended indirect discussions with Washington after accusing the United States of breaching ceasefire understandings through recent military actions.
This week, U.S. forces carried out strikes on several targets inside Iran, prompting retaliatory action by Iran’s Revolutionary Guard against American-linked targets in Kuwait and Beirut.
The military exchanges occurred despite repeated statements from U.S. officials indicating that negotiations with Tehran remained active and that a potential agreement was within reach. However, tangible evidence of significant diplomatic progress has remained limited, despite optimistic comments from Washington dating back to late March.
Weekly Gains Driven by Supply Concerns
Both Brent and WTI contracts were on course to finish the week between 3% and 6% higher as oil shipments through the Strait of Hormuz continued to operate below normal levels.
Although U.S. intervention helped improve vessel traffic through the strategic waterway, overall flows remained significantly below volumes seen before the outbreak of hostilities.
The situation continues to raise concerns over global energy supplies, particularly given that the Strait of Hormuz previously handled roughly 20% of worldwide oil consumption.
Market Remains Focused on Supply Risks
With no clear signs of de-escalation across the region, traders remain concerned that disruptions to energy exports could persist in the near term.
As a result, geopolitical risk continues to provide a strong underpinning for crude prices, with markets closely monitoring developments that could affect production, transportation and global supply chains in the weeks ahead.