Oil set for steepest weekly gain since mid-July over intensifying US-Iran tensions

Oil prices surged on Friday, poised for the steepest weekly increase since mid-July as heightened tensions between the United States and Iran sparked concerns over Middle East supply risks. Brent crude futures climbed 15 cents, or 0.2%, to $95.67 per barrel, while US West Texas Intermediate crude futures rose 26 cents, or 0.3%, to $91.56 per barrel. Weekly gains for Brent were 7.1%, and for WTI, 9.8%, marking the highest increases since the week of July 20.

Recent US attacks that claimed dozens of lives, including Iranian civilians, marked the most intense clashes between the two nations since July. The conflict, which began with US-Israeli strikes at the end of February, now enters its seventh month. Israeli Defence Minister Israel Katz reiterated threats that Israel would "cripple" Iran's military and civilian infrastructure, including energy facilities.

US Vice President JD Vance stated that Washington has no intention of engaging in talks with Iran unless Tehran ceases attacks on commercial shipping in the Strait of Hormuz. Despite this, oil's rally faced a potential obstacle, with Russian President Vladimir Putin hinting at a possible path to a deal to end the war in Ukraine. He noted both the US and China were prepared to support a peace settlement.

Meanwhile, Iran broadened its list of ships deemed non-compliant and subject to penalties such as fines, confiscation, or detention if they attempt to pass through the Strait of Hormuz. Iraq remains among the few vessels Tehran has authorized to transit the strait. Iraqi oil exports jumped to around 2.34 million barrels per day in August from about 1.35 million barrels per day in July, according to two Iraqi energy officials.

September exports are also expected to rise as heavy discounts and Iranian approvals for Iraqi tankers entice buyers.