Oil heads for steepest weekly gain since mid-July on US-Iran tensions

Oil prices surged on Friday, potentially reaching the largest weekly increase since mid-July due to escalating tensions and renewed hostilities between the United States and Iran. Brent crude futures climbed 15 cents, or 0.2%, to $95.67 per barrel, while US West Texas Intermediate crude futures increased 26 cents, or 0.3%, to $91.56 per barrel.

Over the past week, Brent rose 7.1% and WTI surged 9.8%, marking the highest weekly gains since the week of July 20. The week's most intense clashes between the two nations occurred when US attacks killed and wounded dozens, including Iranian civilians, marking the fiercest confrontations since July. These hostilities, which began with US-Israeli strikes in late February, have now entered their seventh month.

Israeli Defence Minister Israel Katz has warned that Israel would "cripple" Iran's military and civilian infrastructure, including energy facilities. US Vice President Joe Biden stated that Washington has no intention of engaging in talks with Iran unless Tehran ceases its attacks on commercial shipping in the Strait of Hormuz. Despite this, oil prices continued their upward trend, capped by Russian President Vladimir Putin hinting at a potential deal to end the conflict in Ukraine, with both the US and China willing to support a peace settlement.

Meanwhile, Iran has broadened its list of vessels deemed non-compliant and subject to fines, confiscation, or detention if they attempt to pass through the Strait of Hormuz. Iraqi ships currently remain among the few vessels Tehran has authorized to transit the strait. Iraqi oil exports rose to approximately 2.34 million barrels per day in August from about 1.35 million barrels per day in July, according to two Iraqi energy officials, with September exports also anticipated to increase as heavy discounts and Iranian approvals for Iraqi tankers attract buyers.