Oil set for second weekly rise as unsettled US-Iran war crimps supply

Oil prices have edged slightly higher on Friday, with analysts predicting a second weekly increase due to the ongoing US-Iran conflict impacting supply from the Middle East. Brent crude futures rose 4 cents to $93.82 a barrel, following a 2.4% gain the previous day. Meanwhile, US West Texas Intermediate crude futures fell 6 cents to $86.78 a barrel, slipping 2.3% from the prior session.

Over the past five days, Brent surged over 7% and WTI rose more than 8%, reaching their highest level since July 24. The upward trend has been fueled by fears of limited supply from major oil producers such as Saudi Arabia, Iraq, the UAE, and Kuwait, as the inconclusive war continues to disrupt production. The recent peace deal between the countries expired without any attempts to revive negotiations, and US President Donald Trump threatened severe economic retaliation against nations supporting Iran.

"Both sides are entrenched but short on time to play the waiting game, in a backdrop of crude prices relentlessly climbing," commented IG analyst Tony Sycamore. In a Wednesday evening statement, Trump vowed to enact "the toughest sanctions in history" against Tehran, warning of consequences for any country providing assistance to Iran.

The United Arab Emirates suspended all financial and economic dealings with Iran until further notice, underscoring the strained relations between the prominent Gulf Arab oil producer and Iran. Thousands have perished in the Iran war, which began on February 28 with US and Israeli strikes on Iran. Since then, Tehran's blockade of the Strait of Hormuz and Iranian attacks on energy infrastructure across the Middle East have hampered global oil and gas flows.

On Wednesday, only nine vessels passed through the Strait of Hormuz, a significant drop from pre-war levels. Prior to the war, around one-fifth of global oil consumption was transported through the waterway.