Oil markets moved higher on Friday after fresh clashes erupted between the United States and Iran, raising fears over the stability of the fragile ceasefire and undermining expectations for progress toward reopening the Strait of Hormuz, a critical route for global oil and liquefied natural gas shipments.
Brent crude futures gained 67 cents, or 0.67%, to trade at $100.73 per barrel by 0650 GMT. U.S. West Texas Intermediate (WTI) crude futures climbed 45 cents, or 0.47%, to $95.26 per barrel. Both benchmarks had surged more than 3% earlier in the session following the latest geopolitical developments.
Friday’s advance interrupted a three-session losing streak fueled by reports earlier this week suggesting Washington and Tehran were nearing a peace agreement that could halt the conflict, though broader disputes surrounding Iran’s nuclear program remained unresolved.
Even after the rebound, both oil contracts are still heading for weekly declines of roughly 6%.
Analysts warn of growing market instability
“The market is on the cusp of a complete breakdown,” said Vandana Hari, founder of oil market analysis provider Vanda Insights.
“Price formation is no longer anchored in a pragmatic reading of the war’s trajectory or the physical realities in the Strait of Hormuz.”
The latest spike in crude prices followed accusations from Iran that the United States had violated the month-old ceasefire. Washington, meanwhile, said its military action came in response to Iranian attacks on U.S. Navy vessels passing through the Strait of Hormuz on Thursday.
Iran’s military stated that U.S. forces targeted both an Iranian oil tanker and another vessel, in addition to civilian areas located in the Strait and on Iranian territory.
Despite the renewed violence, U.S. President Donald Trump later told reporters on Thursday that the ceasefire remained active.
“The U.S. administration continues to oversell the prospects of a thaw, and an optimism-biased market buys into it,” Vanda Insights’ Hari said.
“Curiously, each time, the rebound is gradual and incomplete, making the head fakes at least somewhat effective.”
Hormuz tensions keep supply concerns elevated
The latest exchange of fire came as Washington awaited Tehran’s response to a new peace proposal. The proposal reportedly avoided addressing several contentious issues, including U.S. demands to reopen the Strait of Hormuz, which before the war that began on February 28 handled roughly one-fifth of global oil and LNG flows.
“On the supply front, the picture remains tight,” IG analyst Tony Sycamore said in a note.
Meanwhile, Reuters reported on Thursday that the U.S. Commodity Futures Trading Commission is investigating approximately $7 billion worth of oil trades placed ahead of major Iran-related announcements from Trump.
According to the report, most of the transactions involved short positions placed on the Intercontinental Exchange (ICE) and the Chicago Mercantile Exchange (CME). These bets anticipated falling oil prices before Trump announced delays to military strikes, ceasefire developments or other policy changes involving Iran that subsequently pressured oil markets lower.