Oil set for second weekly gain as US ramps up pressure on Iran

Oil futures climbed on Friday after President Donald Trump announced plans to impose stringent financial penalties on Iran, signaling potential supply constraints. Brent crude futures climbed to $94.39 per barrel, while U.S. West Texas Intermediate crude rose to $87.06 per barrel. These gains mark the highest levels since July 24 for both benchmarks.

John Kilduff, a partner at Again Capital, noted that sanctions often force Iran to comply. However, Iran warned of a "devastating" response to any new U.S. threats, following Washington's pledge to enforce the most punitive sanctions in history. Crispus Nyaga, a research analyst at Empire FX, said that while the immediate impact on supply could be minimal due to Iran's already restricted exports, the situation could worsen if shipping incidents or retaliation against sanctions increase.

Phil Flynn, a senior analyst with Price Futures Group, observed that while Hormuz remains a concern, it is no longer the sole issue, with pipelines, shuttles, U.S. shale, and an unconstrained UAE contributing to increased supply. Despite the earlier peace deal between the U.S. and Iran expiring without renewed negotiations, concerns over reduced supply from major oil producers like Saudi Arabia, Iraq, the UAE, and Kuwait have driven oil prices higher.

The ongoing sanctions have already led to a decline in Iranian crude offers to Chinese buyers, contributing to the recent price surge. As the conflict between the U.S. and Iran approaches its six-month mark, disruptions to energy flows through the Strait of Hormuz persist, posing ongoing challenges to global oil markets.