U.S.-Iran Conflict Fuels Strong Weekly Gains in Oil Prices Amid Geopolitical Risk Premium

Oil prices edged higher on Friday, maintaining momentum for robust weekly gains as escalating military action between the United States and Iran raised fresh concerns over potential supply disruptions in the Middle East. Brent crude futures rose 0.2% to $84.38 a barrel, while WTI advanced 0.6% to $78.71, with both benchmarks poised to deliver weekly increases exceeding 10% amid mounting geopolitical risk premium. Analyst Tamas Varga of PVM Oil Associates noted that significant developments had nearly driven crude prices toward triple digits in recent months. Iran's latest military strikes, including its first direct attack on targets in Syria, followed six consecutive nights of U.S. operations targeting Iranian military capabilities. Tehran's repeated warnings over threats to shipping through the Strait of Hormuz—a chokepoint handling roughly 20% of global oil and fuel flows—have triggered renewed slowdowns in vessel movements after the U.S. reinstated a naval blockade around Iranian ports. Market participants are now weighing the probability of prolonged supply shocks against the possibility of offsetting Iranian exports through increased production elsewhere. Meanwhile, the Energy Information Administration (EIA) reported a 1.7 million-barrel draw in U.S. crude inventories to 409.7 million barrels for the week ended July 10, tightening fundamentals further. Separate data from the American Petroleum Institute (API) showed a smaller decline of 564,000 barrels, falling short of analyst expectations. In sum, geopolitical tensions and shrinking energy stockpiles are underpinning a cautious but sustained rally in oil markets.