Oil prices posted modest gains on Friday as investors continued to evaluate potential supply risks, even as fears of an imminent U.S. military strike on Iran faded.
Brent crude added 5 cents, or 0.1%, to $63.81 a barrel, while U.S. West Texas Intermediate increased by 8 cents, or 0.1%, to $59.27 a barrel by 0749 GMT.
Both benchmarks touched multi-month highs earlier this week after protests intensified in Iran and U.S. President Donald Trump signaled that strikes against the country were a possibility. Despite the recent pullback, Brent was still on track to record a fourth consecutive weekly gain.
“Given the potential political upheaval in Iran, oil prices are likely to experience greater volatility as markets digest the potential for supply disruptions,” BMI analysts said in a note to clients.
Late Thursday, Trump said that Tehran’s crackdown on protesters appeared to be easing, helping to reduce concerns over possible military action that could interfere with oil supplies.
“While (Iranian supply) risks have eased somewhat, they remain significant, keeping the market nervous in the short term,” IG analysts said in a client note.
“Any escalation with Iran will also raise concerns about potential disruption to oil flows through the Strait of Hormuz, a chokepoint where around 20m b/d passes,” they added.
Even so, analysts remained cautious about the longer-term supply outlook this year, despite earlier expectations from OPEC that the market would remain balanced.
“Sentiment is driving markets, but the impact of headlines is always short-lived, especially when fundamentals look comfortable in the backseat,” said Phillip Nova senior market analyst Priyanka Sachdeva.
“Despite the steady drumbeat of geopolitical risks and macro speculation, the underlying balance still points to ample supply … unless we see a genuine revival in Chinese demand or a meaningful bottleneck in physical barrel flows, oil looks range-bound, with Brent broadly hovering between $57 and $67.”
On Wednesday, OPEC said global oil supply and demand are expected to stay balanced in 2026, with demand growth in 2027 forecast to match this year’s pace.
Looking ahead, traders anticipate that near-term price movements will continue to be driven largely by geopolitical developments and macroeconomic signals.
The most immediate catalysts for the oil market are likely to be developments in Iran and upcoming economic data from China next week, said OANDA senior market analyst Kelvin Wong. He added that WTI crude is expected to trade sideways in the near term, within a range of $55.75 to $63.00 per barrel.